Semiconductor stocks gained in morning trading. Super Micro Computer rose 7%; Intel rose 6%; TSMC rose 4%; Nvidia rose 3%; AMD rose 2.5%; Qualcomm rose 2%.
Nvidia was in the spotlight on Monday after investment firm UBS reiterated its Buy rating and raised its price target, noting that recent checks indicate that demand for its upcoming Blackwell line is "exceedingly robust."
Based on the recent checks into Blackwell, it's likely that Nvidia could earn roughly $5 per share in 2025 as the order pipeline for NVL72 and NVL36 is "materially larger" than it was just two months as the budgets for the major hyperscalers firm up, analyst Timothy Arcuri said. Arcuri raised his price target to $150 from $120 as a result.
Morgan Stanley raised its price target for Taiwan Semi (TSM) to NT$1,080.00 from NT$1,180.00 in a note Monday, citing strong demand for artificial intelligence (AI) semiconductors.
The focus, according to Morgan Stanley, should be on "AI semi demand sustainability and TSMC's wafer pricing trend" during TSMC's upcoming second-quarter earnings call.
Ahead of the July 18th earnings report, Morgan Stanley analysts predict TSMC will raise its full-year revenue growth guidance to 25% year over year, driven by sustained AI demand. They also anticipate an upward revision in TSMC's third-quarter revenue growth guidance to 13% quarter-on-quarter.
"TSMC's 'hunger marketing' strategy seems to be working," states the Morgan Stanley note, referring to the company's successful price negotiation tactics to offset margin pressure. Their recent supply chain checks indicate TSMC is effectively communicating potential supply constraints in 2025, potentially leading to price increases for smartphone and PC wafers of 3-4%.
Confidence in AI demand is another key factor. Morgan Stanley highlights cloud AI customers like Nvidia prepaying for TSMC's advanced CoWoS packaging in 2025, signifying strong customer confidence. This, along with customer acceptance of higher CoWoS pricing, leads the investment bank to believe a 20% price increase for CoWoS is achievable.
Based on these positive developments, they expect TSMC's upcoming earnings report to meet market expectations and anticipate "more optimistic wafer pricing and strong SoIC 3D IC demand" in the future.
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