Morgan Stanley Turns Bullish on TSMC Ahead of Q2 Earnings

Morgan Stanley is urging investors to buy shares of Taiwan Semiconductor Manufacturing Co. (TSMC) ahead of its Q2 earnings release on July 17, citing surging AI demand and stronger-than-expected revenue growth as key catalysts.

In a note published Sunday, the bank flagged TSMC's preliminary Q2 revenue of NT$933 billion, up 16% quarter-on-quarter in USD terms, exceeding both internal guidance and Wall Street estimates.

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AI Demand Lifts Guidance Outlook

Morgan Stanley sees a high likelihood that TSMC will raise its full-year revenue guidance, projecting 27% YoY revenue growth for 2025. Analysts also noted that order cuts in 3nm PC chips have been offset by crypto mining demand, with customers advancing orders ahead of a 2026 wafer price hike.

Utilization rates remain robust despite sluggish PC and smartphone sectors — reinforcing optimism around sustained semiconductor demand.

Tariff Risk Offset by U.S. Expansion

TSMC's massive $165 billion U.S. fab investment may help secure tariff exemptions, positioning it well amid escalating trade tensions. The bank maintains a price target of NT$1,288, offering 17% upside from current levels.

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Key Takeaway

TSMC remains a top semiconductor pick for Morgan Stanley, with a rare mix of AI-driven revenue upside, valuation support, and geopolitical insulation. The upcoming earnings call will also serve as a bellwether for the broader chip sector, which has seen margin pressures and valuation corrections.