One Taiwanese stock has everything going for it — not only is it a defensive investment amid recent market turmoil, but it also has an artificial intelligence business, according to Morgan Stanley. It’s Wistron, a Taiwanese electronics company that has collaborated with Nvidia on various initiatives this year — such as developing a heat flow simulator using AI — and uses Nvidia platforms. “Wistron is a defensive AI stock amid recent market volatility,” Morgan Stanley wrote in an Aug. 6 report. “With such an attractive risk-reward ratio, Wistron remains one of our favorite AI (original design manufacturers) server makers.” Morgan Stanley sees recent rising demand for Nvidia’s Hopper platform — an AI computing technology from Nvidia — as a positive for Wistron. “We see rising Hopper demand as a slight positive for Wistron, as they are still the primary supplier of GPU baseboards (UBB) for Hopper,” the bank said. It expects demand for the Hopper product to increase 15% to 20% quarter-on-quarter by the third quarter and 30% to 35% by the fourth quarter. Production volumes at Wistron are therefore likely to increase from the first quarter of 2025, Morgan Stanley said. Morgan Stanley said the stock’s valuation is currently “extremely cheap” and gave a price target of 168 new Taiwan dollars ($5.10), representing an upside of around 72%. “We also believe margins for Wistron will continue to improve as they shift away from consumer electronics and focus on industrial/commercial products,” the bank’s analysts wrote. The current share price implies nine times earnings per share in 2025, which the bank considers undervalued compared to the 15-20 times range investors have been willing to pay for “downstream AI” stocks. Upstream AI refers to goods and services used by other companies, while downstream AI refers to products that have direct user interfaces. — CNBC’s Michael Bloom contributed to this report.
