- Morgan Stanley (MS) reinstated TSMC (TSM) as a ‘top pick,’ citing strong AI capex from Meta (META) (up $7 billion for 2025) and Microsoft (MSFT), with TSMC’s stock closing at $179.28, up 3.80% or $6.56 on Friday.
- Concerns over AI demand, a potential Intel (INTC) joint venture (now ruled out), and tariffs (pending May 7 decision) have eased, with TSMC’s CoWoS-L demand steady and a 2025 P/E of 15.5x.
- Despite a 10% year-to-date drop, TSMC’s 26.65% year-over-year gain and Morgan Stanley’s overweight rating signal a strong rebound potential driven by its key role in AI semiconductor growth.
Morgan Stanley (MS) has reinstated Taiwan Semiconductor Manufacturing (TSM) as a ‘top pick,’ citing renewed optimism driven by accelerating AI capital expenditures from tech giants like Meta (META) and Microsoft (MSFT), with TSMC’s stock closing at $179.28 on Friday, up 3.80% or $6.56. The bank highlighted Meta’s $7 billion increase in its 2025 capex outlook and Microsoft’s shift to shorter-duration server kit spending as key indicators of robust demand for TSMC’s advanced semiconductor solutions, particularly its CoWoS-L packaging technology, which supply chain checks confirm remains steady despite earlier investor concerns. TSMC’s stock, while up 26.65% year-over-year, has faced a nearly 10% decline year-to-date, but Morgan Stanley sees a strong rebound potential, pegging its 2025 price-to-earnings ratio at 15.5x and labeling it an attractive overweight investment.
Previous hesitations from Morgan Stanley centered on three risks – uncertainty in AI demand, a potential joint venture with Intel (INTC), and looming tariff decisions – but these concerns are now diminishing. The possibility of a joint venture has been ruled out by TSMC’s management, though its N2 technology will be shared with Intel’s 18A for producing CPU and GPU tiles, limiting Intel’s competitive impact. On tariffs, uncertainty persists ahead of the May 7 decision, but Morgan Stanley notes no new risks have emerged, further bolstering confidence in TSMC’s outlook.
TSMC, a global leader in semiconductor manufacturing, is well-positioned to capitalize on the AI-driven demand surge, as its advanced nodes and packaging technologies are critical for high-performance computing applications. Morgan Stanley’s reaffirmed optimism reflects TSMC’s strategic importance in the AI supply chain, particularly as hyperscalers ramp up investments to meet growing computational needs. The bank anticipates that with these overhangs easing, TSMC’s stock is poised for a swift recovery, offering investors a compelling opportunity in a sector where AI growth continues to drive innovation and capital allocation.
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