"Stargate" and "China DeepSeek Boom" appear together! Morgan Stanley: AI chip industry chain demand is booming

Despite the impact of DeepSeek, leading AI companies like Nvidia have experienced a wave of adjustments. However, Morgan Stanley believes that DeepSeek, along with the "Stargate" project, will trigger a new surge in demand for the AI chip supply chain.

Morgan Stanley analysts Charlie Chan, Erik W Woodring, and others stated in their latest research report that with the surge in global demand for AI technology, especially in China, key components and market participants in the AI supply chain are ushering in new development opportunities.

The report predicts that with the growth of the "Stargate" project and China's demand for high-performance computing (HPC), the AI supply chain will undergo significant transformation. The report emphasizes that "global cloud capital expenditures (capex) remain strong, indicating robust demand for AI semiconductors/hardware."

Morgan Stanley also raised its expectations for cloud spending by major companies in 2025, increasing the growth rate from 29% year-on-year to 32%.

In addition, analysts are particularly optimistic about the application of GPUs and ASICs in the AI semiconductor field, especially in the competition between Nvidia and AMD, with a preference for Nvidia.

The report also mentions that with the development of AI technology, related supply chain components, such as Blackwell servers and Hopper GPUs, will also see a new peak in demand. These predictions are based not only on current market trends but also consider technological advancements and changes in the global economic environment.

Stargate: A Revolution in Capital Expenditure in the AI Field

The "Stargate" project, as a new driving force for global AI capital expenditure, is attracting widespread attention in the industry. The project is expected to attract up to $500 billion in investment over the next four years, with $100 billion already deployed. This massive investment scale indicates a surge in demand for AI hardware, especially in the high-performance computing (HPC) sector.

Morgan Stanley analysts pointed out, "We are seeing some GB200 NVL72 orders flowing to Dell through SoftBank," indicating that the market demand for high-performance AI hardware is rapidly increasing. The Stargate project not only drives demand for Nvidia and its ODM partners but also brings new vitality to the entire AI supply chain. The successful implementation of this project could become an important milestone in the AI field, promoting the rapid development of related technologies and applications.

DeepSeek Applications: A New Engine for AI Demand in China

China's DeepSeek applications are becoming a new engine driving the growth of AI demand. Morgan Stanley's report emphasizes that thanks to the application of DeepSeek, China's demand for H20 GPUs is returning.

Analysts learned from the Taiwanese semiconductor supply chain that approximately 750k units of Hopper chips are being tested by KYEC in the first quarter of 2025, most of which are H20. This trend indicates that the demand for AI technology in the Chinese market is rapidly increasing, bringing new opportunities to the global AI supply chainThe promotion of DeepSeek applications has not only accelerated the development of AI technology in China but also provided new momentum for the global AI supply chain. As China continues to make progress in the AI field, its demand for high-performance computing is expected to keep growing, further driving the development of the global AI supply chain.

The report suggests that this growth in demand from China could have a profound impact on the global AI hardware market, prompting relevant companies and supply chain participants to make strategic adjustments and resource allocations.

The Synergistic Effect of Stargate and DeepSeek

The report points out that the combination of the Stargate project and DeepSeek applications heralds a new development phase for the AI supply chain. The synergistic effect of these two factors could accelerate the popularization and application of AI technology globally, driving relevant companies and supply chain participants to engage in technological innovation and market expansion.

The successful implementation of the Stargate project and DeepSeek applications could trigger a new wave of investment in the AI field, attracting more capital and resources into the research and development of AI technology and applications. This will not only promote the rapid development of AI technology but also bring new opportunities and challenges to the global AI supply chain.

Technical Challenges and Market Opportunities

Despite the optimistic market outlook, the report also highlights technical challenges, particularly the assembly issues with Blackwell NVL72. Analysts mentioned that due to the ongoing NVL72 assembly bottleneck, more B200 chips are being used in HGX (8-GPU) servers. This challenge may affect the efficiency and cost of the supply chain, but analysts believe that this issue will be resolved with technological advancements.

Regarding market opportunities, the report discusses the competition between AI GPUs and ASICs. Analysts point out that while ASICs may have advantages in certain applications, GPUs still hold an important position in the AI field. As technology continues to evolve and market demands change, the competition between AI GPUs and ASICs will become more intense, bringing new opportunities for relevant companies and supply chain participants