Nvidia, a chipmaker, has dominated headlines following its earnings report, which exceeded expectations due to the growth in artificial intelligence. The company’s shares crossed $1,000 for the first time and have risen around 170% over the past year. Analysts at Morgan Stanley believe that there is still significant buying power in the market for AI-related stocks in Asia. Companies in the region are expected to benefit from the increasing demand for Nvidia’s GPUs and chip series in the second half of the year, leading to an improved profit outlook for the AI supply chain.
Morgan Stanley has highlighted seven stocks that it views as overweight-rated opportunities for investors looking to capitalize on the AI trend. Among these are South Korean tech giant SK Hynix and Taiwanese chipmaker Taiwan Semiconductor Manufacturing Company (TSMC), both of which have received positive ratings from analysts. SK Hynix is included in the iShares MSCI South Korea ETF and Franklin FTSE South Korea ETF, while TSMC is found in the iShares MSCI Taiwan ETF and Franklin FTSE Taiwan ETF. Additionally, the Japanese manufacturer Advantest Corp has been identified as a potential beneficiary of the AI boom.
In addition to the well-known companies in the sector, Morgan Stanley has identified Taiwanese semiconductor companies Alchip Technologies, Andes Technology, and AP Memory Technology, as well as Japanese filtration services provider Micronics, as potential AI beneficiaries with more than 50% upside potential. The Wall Street bank sees opportunities in various aspects of the AI supply chain, including graphic processing units, high bandwidth memory, custom chip design, manufacturing, testing, and rail kits, and suggests that now may be a good time to take advantage of any potential market pullback as it rebalances.
Analysts are bullish on the prospects of SK Hynix and TSMC, with a significant majority giving them buy or overweight ratings. Both companies are key players in the AI supply chain and are expected to benefit from the increasing demand for Nvidia’s products. SK Hynix is considered a strong play in the South Korean market, while TSMC is a major player in Taiwan, making them attractive options for investors looking to capitalize on the AI boom.
Overall, the outlook for the AI supply chain in Asia looks promising, with companies set to benefit from the continued growth in demand for AI-related products and services. Morgan Stanley’s list of overweight-rated stocks offers investors a range of opportunities to capitalize on the AI trend, including well-known companies like SK Hynix and TSMC, as well as lesser-known players like Alchip Technologies, Andes Technology, AP Memory Technology, and Micronics. As the market continues to evolve and adapt to the AI revolution, investors have a variety of options to consider when building a portfolio focused on this fast-growing sector.
