Morgan Stanley has told its investors that now is a good time to buy more shares of Taiwan Semiconductor Manufacturing. The bank shared this view in a note released on Thursday.
The firm raised its price target for the stock. It moved the target to NT$1,888 from NT$1,688. It also kept its positive rating on the company. Morgan Stanley still sees TSMC as one of its top stock picks.
The bank says the reason is simple. Demand linked to artificial intelligence is rising very fast. At the same time, the company’s profit margins are improving.
Analyst Charlie Chan said investors should increase their exposure to TSMC before 2026 begins. He believes the company is entering a very strong growth phase.
Morgan Stanley expects TSMC to guide revenue growth for 2026 in the mid 20% range. However, the bank thinks actual growth could be closer to 30%. This would be much higher than what most of the market expects right now.
The firm is basing this view on TSMC’s heavy spending plans. It expects the company to invest about $49 billion in 2026. A big part of this will go toward expanding its 3 nanometer chip capacity. These advanced chips are in high demand for AI use.
Based on these factors, Morgan Stanley believes TSMC’s 2026 revenue could grow by 30%. The current market consensus stands at around 22%.
The bank also noted that TSMC’s management may sound cautious at first. It expects guidance to be conservative in the early part of the year. Still, Morgan Stanley believes actual results will beat those estimates as the year progresses.
Looking further ahead, the firm became even more optimistic. It raised its long term forecast for AI related chip manufacturing revenue. It now expects this segment to grow at a 60% annual rate from 2024 to 2029.
Morgan Stanley estimates that the total global AI chip market could reach $550 billion by 2029. Out of this, TSMC could earn about $107 billion just from making AI chips for other companies. This would account for roughly 43% of its total revenue.
The bank also raised its earnings estimates for 2026 and 2027. It said the stock still looks attractive based on its valuation. Morgan Stanley added that strong AI demand is continuing to power growth across the global semiconductor industry.
