5 big analyst AI moves: Apple lifted to Buy, AI chip bets reassessed
Investing.com -- Morgan Stanley upgraded Semiconductor Manufacturing International Corp to Overweight on increasing demand for domestic AI GPUs and stronger policy support for China’s chip ecosystem.
The proliferation of AI applications and government backing for local GPU development is expected to drive leading-edge foundry demand over the next two years.
MS raised its price target for SMIC to HK$80, implying 32 times estimated 2027 earnings, and expects gross margins to improve as yields rise and AI chips account for a larger share of revenue.
“China can reach a certain level of national security by producing its own AI GPU chips,” Morgan Stanley wrote, forecasting 7-nanometer and below capacity to nearly double from 22000 wafers per month in 2025 to 42000 in 2026.
The firm said local toolmakers such as Naura and AMEC have replaced imported equipment that previously constrained advanced chip production.
China Mobile plans to deploy 100000 domestic GPUs by 2028 for a 100-exaflop computing network, using only local chips. Morgan Stanley lifted its China AI GPU revenue forecast to 180 billion yuan for 2027, up from 136 billion yuan previously, implying a 62% compound annual growth rate between 2024 and 2027.
The bank said the shift away from U.S. suppliers is accelerating after Nvidia’s chief executive Jensen Huang said the company’s share of China’s AI processor market had fallen to near zero.
Morgan Stanley also downgraded Hua Hong Semiconductor to “Underweight,” citing weaker profitability and oversupply in mature nodes. It said SMIC remains better positioned due to higher margins, technology capabilities, and exposure to AI-related demand.