Morgan Stanley has increased its target price for Taiwan Semiconductor Manufacturing Company (TSMC) to NT$2,988, maintaining an "Overweight" rating. The decision follows TSMC's revised 2026 revenue growth guidance, which now exceeds 40% year-on-year, up from over 30%, driven by robust AI demand despite consumer demand challenges. TSMC's management highlighted the rapid increase in cloud capital expenditure by Cloud Service Providers (CSP) as a key factor. Although TSMC did not update its AI semiconductor revenue CAGR forecast, it noted that actual performance surpasses the previous 55%-60% forecast. Morgan Stanley suggests a 70%-80% CAGR for TSMC's AI semiconductor business is reasonable. The bank anticipates that TSMC's quality profitability will continue to attract capital inflows, with upcoming CSP cloud capital expenditure updates serving as a potential catalyst.