TSMC Achieves Record High on Morgan Stanley's Upgrade of Nvidia Price Target Amid AI Chip Demand Surge

Morgan Stanley Boosts TSMC and Nvidia Shares

The Taiwan Semiconductor Manufacturing Company (TSMC) saw its shares reach a historic high following a significant boost from Morgan Stanley, which raised the price target for chip designer Nvidia due to the ongoing spike in demand for AI chips.

Morgan Stanley's Influence

The world's leading producer of advanced processors, TSMC, is responsible for manufacturing chips for industry giants like Nvidia and Apple. On February 7th, Morgan Stanley increased Nvidia's price target from $603 to $750, citing a robust near-term outlook, which led to a surge in investor confidence.

Market Performance and Trading Activity

TSMC shares began trading at 709 New Taiwan dollars on Thursday morning and closed at NT$697, marking an impressive nearly 8% increase from the previous close on February 5th. Following the Chinese New Year break, the Taiwan Stock Exchange resumed trading on February 15th, and both TSMC and Nvidia were quick to make significant gains.

Nvidia's Role in the AI Boom

Nvidia, a prominent player in the AI space, has experienced substantial growth due to the surge in interest in generative AI, particularly after the widespread adoption of OpenAI's ChatGPT in November 2022. The AI boom, powered by the increased demand for powerful graphics processing units (GPUs) to train large language models like ChatGPT, has significantly benefited Nvidia.

Morgan Stanley's Insight and Projections

Morgan Stanley's analysts underscored the pivotal role of Nvidia's upcoming B100 GPU, which is poised to outperform the H100 AI processor. According to the analysts, the transition to the B100 GPU is expected to have a substantial near-term impact, influencing H100 lead times and competitive dynamics within the market.

Future Prospects for TSMC and Nvidia

TSMC, currently at the forefront of chip manufacturing with 3-nanometer technology, is eyeing the commencement of mass production of 2-nanometer chips in 2025. The shrinking nanometer size in chips, indicative of the size of individual transistors, typically results in more powerful and efficient chips as a greater number of transistors can be incorporated onto a single chip.

Market Ripple Effect: Orient Semiconductor Electronics Ltd

The positive momentum extended beyond TSMC and Nvidia, as shares in Taiwan's Orient Semiconductor Electronics Ltd also surged by 10% on Thursday, reflecting the broader impact of the heightened demand for AI-related chips.

In conclusion, TSMC's record-high shares, propelled by Morgan Stanley's endorsement of Nvidia and the ensuing surge in AI chip demand, reflect the evolving landscape of the semiconductor industry and the pivotal role played by key players like TSMC and Nvidia in meeting the burgeoning demand for advanced chip technologies.