Driven by the artificial intelligence craze, investor darling Nvidia once again made headlines last week when it beat profit expectations. The chipmaker’s shares topped $1,000 for the first time last Wednesday and are up about 170% in the past year. Morgan Stanley noted that the reaction to Nvidia’s first-quarter results was “very telling about how much buying power is still in the market.” “We are far from peaking in artificial intelligence. This should be enough to maintain investor confidence in Asia’s artificial intelligence supply chain stocks,” the investment analyst wrote in a May 22 research note. With support for the Nvidia H100 Asian companies will get a boost in the second half of this year from growing demand for GPUs (graphics processing units) and the Hopper chip family. This presents “the prospect of improved margins for Asia’s AI supply chain,” the analysts noted, adding that “now is an opportunity to take advantage of any potential pullback as markets rebalance.” While several companies outperformed, the Wall Street bank said it was “most constructive” on stocks related to graphics processing units, high-bandwidth memory, custom chip design, manufacturing, testing and rail kits. Here are seven of Morgan Stanley’s Outperform-rated stocks that play into these artificial intelligence themes: Morgan Stanley’s list of artificial intelligence stock opportunities includes South Korean tech giant SK Hynix and Taiwanese chipmaker TSMC. Both companies have made headlines over the past year, with analysts largely bullish on their prospects. FactSet data shows that 35 of the 39 analysts following SK Hynix have given the stock a buy or overweight rating, while 36 of the 38 analysts following TSMC have given the stock a buy rating. Or an Overweight rating. SK Hynix shares are held by the iShares MSCI Korea ETF (weight 8.4%) and Franklin FTSE Korea ETF (weight 8.3%). TSMC shares are included in the iShares MSCI Taiwan ETF (weight 25.1%) and the Franklin FTSE Taiwan ETF (weight 22.2%) Beyond the headlines, Morgan Stanley also sees potential in Japanese manufacturer Advantest Corp. The company’s holdings are held in the Goldman Sachs ActiveBeta Japan Equity ETF (weighting 1.0%) and JP Morgan BetaBuilders Japan ETF (weighting 0.8%). Technology (Andes Technology) and AP Memory Technology. —CNBC’s Michael Bloom contributed to this report.
