Nvidia’s strong quarterly earnings, driven by the artificial intelligence boom, have propelled its stock price to over $1,000 and a 170% increase over the past year. Morgan Stanley believes that there is still significant buying power in the market and sees continued growth in AI supply chain stocks in Asia, particularly in the second half of the year. The investment bank is bullish on companies in the graphic processing units, high bandwidth memory, and custom chip design sectors, given the ongoing demand for Nvidia’s H100 GPUs and Hopper chip series.
Among the seven AI-related stocks that Morgan Stanley is overweight on, SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC) are highlighted for their strong prospects. Both companies have received buy or overweight ratings from a majority of analysts covering them. SK Hynix is included in ETFs such as iShares MSCI South Korea and Franklin FTSE South Korea, while TSMC is part of iShares MSCI Taiwan and Franklin FTSE Taiwan ETFs. The Japanese manufacturer Advantest Corp, which is held in ETFs such as Goldman Sachs ActiveBeta Japan Equity and JPMorgan BetaBuilders Japan, is also seen as a potential beneficiary of the AI trend.
In addition to the well-known companies, Morgan Stanley also identifies Taiwanese semiconductor firms Alchip Technologies, Andes Technology, and AP Memory Technology, along with Japanese filtration services provider Micronics, as potential AI beneficiaries with over 50% upside potential. These companies are expected to benefit from the growing demand for AI-related technologies and services. Investors are advised to take advantage of any potential market pullback to capitalize on the opportunities presented by the AI supply chain in Asia.
Overall, the outlook for AI-related stocks in the Asia region remains positive, with continued growth expected in the coming months. The strong performance of Nvidia and other key players in the industry has boosted investor confidence in the sector. Analysts see opportunities for companies involved in graphic processing units, custom chip design, and manufacturing to thrive as the market rebalances. As the AI boom continues, companies in Asia are well-positioned to capitalize on the increasing demand for advanced technologies and services. Investors are encouraged to consider these AI-related stocks for potential growth opportunities in the evolving market landscape.
