The long-term prospects for artificial intelligence(AI)-linked semiconductors is making Morgan Stanley even more bullish about chip stocks in Taiwan, China, Japan and South Korea.
The US broker upgraded the sector in China to “attractive” from “in-line” and lifted price targets for Korea’s Samsung Electronics Co and SK Hynix Inc, as Japan’s chip sector was also raised to “attractive” from “in-line”, with Disco Corp climbing to “overweight.”
“We expect tech deflation — price elasticity — coupled with secular AI semi demand will together trigger the next logic semi upcycle,” Morgan Stanley analysts including Charlie Chan (詹家鴻) wrote in a note on Thursday.
“Historically, the reversion of semi inventory days is a strong signal” for stock price appreciation, the analysts said.
Global sales data reported by the Semiconductor Industry Association for May showed signs of bottoming out, with revenue rising 1.7 percent from April, Nomura Holdings Inc said.
Morgan Stanley is expanding its bullish view on the region’s chipmakers after having upgraded some names in Taiwan and South Korea in October last year.
The firm said it had seen a rush of orders over the past two weeks for AI semiconductors, revising up earnings for players such as Taiwan Semiconductor Manufacturing Co (台積電) and recommending that investors participate in a smartphone recovery. Will Semiconductor Co (上海韋爾半導體) was upgraded to “overweight.”
In a separate note, analysts including Shawn Kim said South Korea’s memorychip makers were set to benefit from a growth of nearly 10 times in the DRAM market to US$19 billion over the next four years. SK Hynix became the analysts’ top pick.
Morgan Stanley’s bullish view came before Samsung announced its worst quarterly revenue since at least 2009.
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