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One semiconductor supplier could win big from a strong outlook from chip giant Nvidia , according to Morgan Stanley. ” TSMC is the sole supplier for NVDA AI GPU, so we view NVDA’s July-quarter revenue guidance, due on May 22, as a key catalyst,” wrote analyst Charlie Chan. “We would expect TSMC’s share price to rise if NVDA’s guidance were to beat expectations.” The artificial intelligence darling is slated to report results after the market closes Wednesday. Shares have surged more than 91% this year, building on 2023’s rally as AI enthusiasm shows no signs of waning. Investors will closely monitor Nvidia’s July revenue guidance, which the market regards as one of the most significant indicators of AI server demand. Morgan Stanley estimates revenues can reach $26 billion in the current quarter. “We estimate TSMC to derive 15% of its total revenue from AI-related demand in 2024e, so we view NVDA’s outlook guidance as a near-term share price catalyst,” Chan wrote, adding that he expects more AI GPU output from Nvidia this year using Taiwan Semiconductor capacity. TSM YTD mountain Shares this year The Wall Street investment bank outlined three scenarios that could come from the results, with a base case assuming that Nvidia offers guidance that aligns with buy-side estimates calling for $26 billion to $28 billion in revenues for the July period. That could yield a 1% uptick for Taiwan Semiconductor. A beat on guidance expectations could lead to a 3% advance, while an outlook that falls short could mean a 2% drop in shares. U.S.-listed shares of Taiwan Semiconductor have rallied 47% this year.
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