Morgan Stanley raises Taiwan Semiconductor's target price to NTD 1,180, with a "Hold" rating
The bank expects the company to raise its third-quarter revenue growth guidance to a quarterly increase of 13%, with gross margin range nearly at the level of the second quarter (median 52%)
Morgan Stanley's report pointed out that Taiwan Semiconductor (TSM.US) will disclose its financial performance for the second quarter of the 2024 fiscal year on July 18th. The bank expects the company to raise its third-quarter revenue growth guidance to a quarterly growth of 13%, with gross margin range nearly matching the second quarter level (median 52%).
With robust demand for artificial intelligence (AI), the bank believes that Taiwan Semiconductor will raise its full-year revenue growth guidance to a mid-range level of 20% on an annual basis, compared to the original guidance of a low to mid-range level of 20%. In terms of full-year capital expenditure, assuming Taiwan Semiconductor obtains discounts on equipment purchases, the bank expects its full-year capital expenditure guidance to be updated to between USD 30 billion and USD 32 billion, compared to the original guidance of between USD 28 billion and USD 32 billion.
The bank believes that Taiwan Semiconductor's second-quarter performance and guidance will meet market expectations, with a more positive outlook on its wafer pricing, and considers the demand for its SoIC 3D to be stronger (Apple (AAPL.US) will adopt it in the second half of next year, while NVIDIA (NVDA.US) will also adopt it in 2028). Therefore, the target price for Taiwan Semiconductor (02330.TW) has been raised from TWD 1,080 to TWD 1,180, with a "hold" rating.
Taiwan Semiconductor's stock price hit a new high this morning, reaching TWD 1,035, up 2.99%