What signals? Regarding the semiconductor industry, Morgan Stanley raises target stock prices for multiple companies!

Questioning AI · Why does Morgan Stanley remain optimistic about the upside potential of semiconductor stocks against the trend?

Cailian Press, May 8 (Editor: Huang Junzhi) Morgan Stanley is optimistic about semiconductor stocks, despite this sector already being unusually “hot.” The iShares Semiconductor ETF (SOXX) has risen nearly 57% this year, but Morgan Stanley not only did not predict a peak but also raised the target prices for several stocks within the industry, including IonQ, Microchip Technology, and GlobalFoundries.

IonQ, Inc. is a U.S. quantum computing hardware and software company; Microchip Technology is an American manufacturer of microcontrollers, memory, and analog semiconductors; GlobalFoundries is a leading critical semiconductor manufacturing company dedicated to large-scale AI applications from the cloud to the physical world.

The logic behind Morgan Stanley’s upward revision of target prices is quite “simple and crude.”

In short, the bank points out that the path for IonQ’s backlog orders to translate into revenue is beginning to emerge; Microchip Technology is ready to convert revived demand into faster profit growth; GlobalFoundries is building a more robust pricing and product mix strategy. Morgan Stanley believes that if these factors can be successfully realized, there is still greater room for this rally to develop.

Morgan Stanley emphasizes that, even though SOXX has already increased nearly 57% so far in 2026, the actual profit-driving factors can still continue to push semiconductor stock prices higher.

IonQ: A clearer revenue path for 2026

Specifically, Morgan Stanley has raised IonQ’s target stock price from $38 to $47, reasoning that the company is expected to provide better-than-expected guidance for 2026, thanks to acquisitions and new contract signings.

Morgan Stanley points out that this is important because IonQ’s base is still small, with quarterly revenue around $11 million to $12 million. At this scale, the timing of contract signings or newly acquired revenue can significantly impact earnings reports. IonQ now needs to convert demand into a stable revenue stream and demonstrate a clear growth trend well above current revenue levels.

Microchip Technology: Recovery is transforming into profit leverage

As demand in industrial and data center markets begins to stabilize, along with additional support from aerospace and defense sectors, Morgan Stanley has also raised Microchip Technology’s target stock price from $69 to $92.

Morgan Stanley notes that most of Microchip’s business comes from high-margin end markets. The industrial sector accounts for 30% of revenue, while aerospace and defense contribute 18%. As demand in these areas recovers, Microchip can produce more chips without significantly increasing costs, thereby enabling profit growth to outpace sales growth.

“This makes the recovery outlook more pragmatic. Microchip’s growth is no longer dependent on long-term forecasts but relies on demand improvement, increased factory utilization, and margin expansion,” the bank added.

Additionally, Morgan Stanley states that the recovery in multiple markets will also enhance its sustainability. The strong growth in industrial, data center, and aerospace and defense sectors is more sustainable than reliance on a single field. Since industrial and aerospace & defense businesses account for 48% of the company’s total revenue, even a slight rebound can significantly boost profitability.

GlobalFoundries: Building a stronger pricing strategy

Morgan Stanley has raised GlobalFoundries’ target stock price from $47 to $58, believing that the company has a more durable pricing and product mix advantage, thanks to stable pricing of older chip technologies and growth in silicon photonics.

Currently, GlobalFoundries’ quarterly revenue is about $1.6 billion to $1.7 billion. Morgan Stanley points out that at this scale, even if sales growth is not strong, maintaining existing product prices can significantly increase revenue.

The story extends far beyond traditional chips: silicon photonics technology allows GlobalFoundries to venture into AI and network infrastructure fields, where faster data transmission and optical connectivity are becoming increasingly important.

Morgan Stanley notes that if long-term agreements and capacity commitments can keep prices stable, GlobalFoundries can offer more stable and predictable revenue than traditional chip manufacturers.

However, Morgan Stanley also warns that if future demand from AI or industrial sectors slows down, the recent rally in the semiconductor industry could be broken.

For IonQ, Microchip Technology, and GlobalFoundries, the key lies in execution. Morgan Stanley points out that if backlog orders can be converted into revenue, capacity utilization can improve profit margins, and prices can remain stable, there is still room for further upside in this sector. Conversely, this rally could come to an end.

(Cailian Press, Huang Junzhi)