There is little doubt that chip stock Taiwan Semiconductor has been in a fight of late. While it looks to come out on top on several fronts, it is definitely not having an easy time of it as a range of competitors work to take it on. New recommendations from Morgan Stanley, though, are proving positive, and investors are getting in. Taiwan Semiconductor shares are up over 4% in Friday afternoon’s trading.
Analyst Charlie Chan took a look at Taiwan Semiconductor, and what he found was compelling in several ways. Chan—who has a four-star rating on TipRanks—has a price target of NT$1,288 on the stock, which represents a 42% upside potential against the closing price on Thursday. He also has an Overweight rating on the stock.
Essentially, Chan put the new price target in place despite recent losses, noting that Taiwan Semiconductor is now a “top pick” at Morgan Stanley. The biggest reason: mounting spending on artificial intelligence (AI) tools and applications from the “Magnificent Seven” stocks. With capital expenditures on AI on the rise, Chan notes, that should be enough to produce a “quick rebound” from the losses Taiwan Semiconductor has recently seen.
Building Out in Arizona
Meanwhile, in a move that is sure to give Intel (INTC) fits, Taiwan Semiconductor is building a third new fabrication operation in Phoenix, Arizona. Reports noted that the new facility means about 6,000 jobs for the region, which should start up before 2030 arrives. The new facility will apparently focus on two nanometer chips, or potentially, even more advanced technologies, if such become available by the time the plant goes live.
Given that a lot of Intel’s production is located in Arizona, this is the kind of thing that made some wonder if Intel and Taiwan Semiconductor were not working on a joint venture after all. Why not have production right in the other guy’s backyard if that were not the case. But given earlier reports that such a venture is not to be, at least not currently, this looks less like a joint venture plan and more like a direct shot across the bow to a competitor.
Is Taiwan Semiconductor a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on TSLA stock based on seven Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 28.73% rally in its share price over the past year, the average TSM price target of $219.43 per share implies 21.89% upside potential.
