Semiconductor stocks are rebounding this year following a tough 2022. The iShares Semiconductor ETF, which tracks this sector, has risen nearly 25% in the past year, outperforming the major U.S. indices. But there have been recent shocks in the cyclical industry. Taiwan Semiconductor Manufacturing Company reported a decrease in monthly revenue for nearly four years. Samsung also reported a 96% decline in quarterly profits. The South Korean chipmaker also announced it would cut its memory chip production due to slowing global demand, declining growth and an oversupply. Wall Street, however, is looking past this bad news. A number of investment banks have issued positive comments on both chip stock in response to the announcements. Morgan Stanley remains bullish on TSMC despite the expectation of pressure in the near term. Investors are still asking about our opinion on TSMC’s full-year guidance. In light of a milder recovery in semi demand in 2H23, we believe that the company may be able to give a more conservative capex 2023 guidance and tone down its revenue outlook for the full year. TSMC is due to release its first-quarter results on April. The bank's base scenario is that TSMC will guide for a longer than expected inventory correction. Morgan Stanley still believes TSMC to be a good buy. Morgan Stanley said that it would "stay overweight on TSMC" for the 1Q23 results, citing its long-term technological leadership. It also maintained its price target on the stock of 700 Taiwanese Dollars ($22.97). This represents a potential gain of around 30% over its Monday closing price. It's not just this bank that is bullish about TSMC. Over 90% of the analysts who cover the stock rate it as a "buy" and give an average potential upside of 16,9%.
Tim Seymour is the founder and chief investment office of Seymour Asset Management. He believes that TSMC shares are at a low point, which presents a good opportunity to buy. Seymour told CNBC's Fast Money on Monday that you should buy the stock at a low price if possible. Seymour said that "right now, this is a stock that everyone should own. They should probably want it somewhere around here which is 16 times (earnings)", he added. You could probably buy it for less because I think that semis are at their peak. Tanaya Macheel, CNBC's Tanaya Macheel, contributed to the reporting.