TSM named new top pick at Morgan Stanley on AI demand

May 02, 2025 05:45 AM AEST | By Investing

Google News:

TSM named new top pick at Morgan Stanley on AI demand

Recent News

Santos Surge Lifts ASX 200 as ASX Ltd and Gold Miners Weigh on Gains

Pilbara Minerals Appoints Interim CFO | ASX 100 Lithium Stock Leadersh...

Santos Takeover Bid Faces State Scrutiny | ASX 50 Oil Stock in Spotlig...

ASIC Scrutiny Sparks Reform Talk for ASX Listing | ASX 100 & ASX 200 F...

Investing.com -- Morgan Stanley moved Taiwan Semiconductor Manufacturing back to a top pick, citing strong AI-driven capital spending from major tech firms and the easing of several key concerns.

“With the robust AI capex guidance from Meta (NASDAQ:META) and Microsoft (NASDAQ:MSFT), we move TSMC back to our Top Pick,” Morgan Stanley (NYSE:MS) analysts wrote in a note.

The brokerage previously held back on this call due to “three major overhangs – (1) AI demand sustainability, 2) Intel (NASDAQ:INTC) JV possibility, and 3) semiconductor tariffs.”

On AI demand, Morgan Stanley said recent investor worries about order cuts for TSMC’s advanced CoWoS packaging technology appear overblown.

“Our latest supply chain checks suggest that CoWoS-L demand at TSMC is unchanged,” the analysts wrote.

They highlighted that Meta “raised its full-year 2025 capex plan” by about $7 billion, while Microsoft “signaled a shift in the mix of that spend...towards shorter duration server kit to fill those data centers.”

The Intel overhang is also said to look less concerning, with TSMC expected to play a limited role in future CPU production.

“TSMC’s N2 should be used to produce both CPU and GPU tiles, but it will be shared with Intel 18A,” Morgan Stanley said. They added that “TSMC management ruled out the JV possibility.”

Regarding semiconductor tariffs, Morgan Stanley said uncertainty remains until the May 7 decision but did not cite any new risk developments.

The firm emphasized that “TSMC is the more attractive OW [overweight]” stock compared to peers, trading at a 2025 estimated P/E of 15.5x.

“We have expected a quick rebound in the stock once these overhangs are removed,” the analysts said.

This article first appeared in Investing.com

Disclaimer

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Pty Ltd (“Kalkine Media, we or us”), ACN 629 651 672 and is available for personal and non-commercial use only. The principal purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. Kalkine Media is neither licensed nor qualified to provide investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from a financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary.
The content published on Kalkine Media also includes feeds sourced from third-party providers. Kalkine does not assert any ownership rights over the content provided by these third-party sources. The inclusion of such feeds on the Website is for informational purposes only. Kalkine does not guarantee the accuracy, completeness, or reliability of the content obtained from third-party feeds. Furthermore, Kalkine Media shall not be held liable for any errors, omissions, or inaccuracies in the content obtained from third-party feeds, nor for any damages or losses arising from the use of such content.
Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyrighted to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have made reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.
This disclaimer is subject to change without notice. Users are advised to review this disclaimer periodically for any updates or modifications.