Analysts at Morgan Stanley Identify Global Stocks to Benefit from Artificial Intelligence Trend
Overview
Stock Recommendations
Morgan Stanley proposes various stock picks across different regions and sectors to capitalize on the AI trend:
‘Greater China’ Stock Picks
- Taiwan Semiconductor Manufacturing Company (TSMC) – Morgan Stanley’s top choice in the “Greater China Semiconductors” sector, considering its technological leadership and potential for AI-related semiconductors. The bank estimates that TSMC will generate 6% of its revenue from AI semiconductors by 2023, projecting a compound annual growth rate of 50% over the next five years.
- Global Unichip Corp – Morgan Stanley recommends building positions on this Taiwanese company, as they believe the market has already accounted for the anticipated weakness in 2023.
AI Tech Hardware Picks
- Wistron – Morgan Stanley’s preferred server company, indicating its potential for AI tech hardware.
- Asustek – Morgan Stanley holds a positive view on this PC-maker.
- Quanta Computer – Morgan Stanley favors this tablet company due to its partnership as a key server rack assembly provider to US hyperscalers, with anticipated growth starting from the fourth quarter.
South Korean and Japanese Stocks
- SK Hynix – Morgan Stanley’s top chipmaker selection in South Korea.
- Samsung – Morgan Stanley also recommends this company based in South Korea.
- Disco Corporation – Morgan Stanley identifies this Japanese semiconductor manufacturing device maker as having significant demand increases related to generative AI equipment.
Conclusion
Amid a shift in spending toward AI and a persistent supply-demand imbalance, Morgan Stanley advises investors to be aware of the potential upside risks for AI stocks. The bank reassures that the fundamentals of these companies remain strong, with higher earnings revisions and more attractive valuations.
This report includes contributions from CNBC’s Michael Bloom and Yeo Boon Ping.