Taiwan Semiconductor Emerges as Top AI Investment Pick Amid Strong Tech Earnings

Morgan Stanley says this is the top pick to buy after Microsoft and Meta sound the all clear on AI spending

Morgan Stanley highlighted Taiwan Semiconductor Manufacturing as its top stock pick once again after strong artificial intelligence capital expenditures from Meta and Microsoft helped dispel concerns. The bank currently has an overweight rating on shares of the Taiwan-dominated Taiwan Semiconductor Manufacturing. Analyst Charlie Chan's price target of NT$1,288.00 implies a potential upside of 42% from the stock's April 30 close of NT$908.00. Shares of the Taiwan-traded Taiwan Semiconductor Manufacturing have shed 12% this year. The stock's American Depositary Receipt, trading under the ticker TSM on the New York Stock Exchange, has slipped nearly 13% over the same period. TSM YTD mountain TSM YTD chart Chan wrote that previously, three major overhangs "kept us from making this, the best-quality stock we cover, our Top Pick during the recent stock market turbulence." However, strong AI spending from the "Magnificent Seven" has since changed his mind. "With the robust AI capex guidance from Meta and Microsoft, we move TSMC back to our Top Pick," he wrote. "We have expected a quick rebound in the stock once these overhangs are removed." The first overhang Chan cited was questions about the sustainability of AI demand. Meta and Microsoft 's suggestions that AI demand remains strong has helped ease these concerns, he said. Meanwhile, a joint venture between Taiwan Semiconductor and Intel has now been ruled out . Ultimately, this might be to the company's benefit, Chan added. "Since Intel's technology operates quite independently, we can see why TSMC management didn't see a JV possibility," he wrote. "This echoes our earlier view that TSMC's interest in this might be low because it wouldn't benefit the company's shareholders and would create conflict with its other customers." The final overhang that has been removed is concern about the impact of U.S. tariffs on semiconductors and semiconductor manufacturing equipment, which are likely to be announced after May 7, Chan said. The analyst expects the costs, if any, will be absorbed by customers. "We believe TSMC's US$165bn investment in the U.S. may increase the chance of exemption. Even if there will be some semi tariffs, in its previous earnings call, TSMC already said that the cost would be transferred to customers," Chan wrote.

Taiwan Semiconductor Gains On Strong Earnings From Meta And Microsoft Boosting AI Demand - Taiwan Semiconductor (NYSE:TSM)

Taiwan Semiconductor Manufacturing Co TSM stock is trading higher Friday in sympathy with customers Meta Platforms, Inc META and Microsoft Corp MSFT this week's quarterly financial results. Meta reported its first-quarter financial results after the market closed on Wednesday. Its revenue was $42.31 billion, up 16%, beating analyst estimates of $41.39 billion. Also Read: Taiwan Semiconductor Breaks Ground On Third Arizona Plant Without US Subsidies Amid Trump Tariff Threat The company reported first-quarter earnings of $6.43 per share, topping analyst estimates of $5.21 per share. Meta expects second-quarter revenue of $42.5 billion to $45.5 billion versus estimates of $44.06 billion. Microsoft also reported third-quarter financial results after the market closed Wednesday. It reported a third-quarter revenue of $70.07 billion, up 13%. The revenue total beat a Street consensus estimate of $68.43 billion. The company reported quarterly earnings per share of $3.46, beating a Street consensus estimate of $3.22. The upbeat results of the Big Tech giants reflect that they remain committed to their artificial intelligence ambitions despite U.S. semiconductor sanctions and tariff policies. Dealers told Focus Taiwan strong earnings from two major U.S. tech giants reduced concerns about AI demand despite tariff disruptions. Cathay Futures Consultant Tsai Ming-han told Focus Taiwan that bargain hunters capitalized on recent heavy losses caused by Trump's unpredictable tariff policies. Taiwan Semiconductor attracted strong buying, backed by the artificial intelligence frenzy, which significantly boosted the Taiex, the weighted index on the Taiwan Stock Exchange (TWSE). Morgan Stanley returned to Taiwan Semiconductor Manufacturing as a top pick, citing strong AI-driven capital spending from Big Tech firms, including Meta and Microsoft. Price Action: TSM stock traded higher by 3.51% to $178.79 at the last check on Friday. Read Next: Samsung Galaxy Sales Soar But Foundry Segment Lags As Trump Tariffs Loom Photo by Jack Hong via Shutterstock TSMTaiwan Semiconductor Manufacturing Co Ltd$178.653.43%Stock Score Locked: Want to See it? Benzinga Rankings give you vital metrics on any stock - anytime. Reveal Full ScoreEdge RankingsMomentum59.91Growth82.27Quality-Value51.38Price TrendShortMediumLongOverviewMETAMeta Platforms Inc$592.663.57%MSFTMicrosoft Corp$435.692.42%Market News and Data brought to you by Benzinga APIs