After Nvidia's Q4 Report, These 3 Stocks to Buy Could Be the Real Winners
According to Morgan Stanley analysts, estimate-beating results from Nvidia could act as a catalyst for significant gains in Asia-based tech stocks. Their research indicates that if Nvidia's revenue continues to defy expectations, Asian-based artificial intelligence (AI) names could see price upside ranging from 3% to 15%.
Analysts from the investment bank have also identified several Asian-based AI companies positioned to benefit from Nvidia's earnings. Among these, we have selected the top three: Taiwan Semiconductor Manufacturing (TSM) remains a linchpin in the global semiconductor supply chain, while Alibaba (BABA) and Infosys (INFY) are well-positioned to capitalize on rapid technological adoption and digital transformation trends sweeping across Asia. These companies are expected to leverage Nvidia's performance as a catalyst, potentially accelerating their growth in an increasingly competitive market.
With these compelling prospects in play, let's take a closer look at these stocks to uncover the underlying catalysts that could drive their future growth.
AI Stock #1: Taiwan Semiconductor Company
Valued at around $936 billion by market capitalization, Taiwan Semiconductor Manufacturing Company (TSM) is a pioneering force in the semiconductor industry, renowned for its leading 5-nanometer (nm) and 3-nm nodes that make it a key supplier for top tech companies.
TSM's stock delivered an exceptional performance over the past 52 weeks, surging nearly 30%. Despite this impressive rally, it remains attractive, trading at a forward P/E of 19.7x, a 24% discount relative to the sector average of 23x, and below its 5-year average.
In the fourth quarter, TSM posted results that exceeded Wall Street expectations on both top and bottom lines. The company reported revenue of $26.9 billion, up 39% year-over-year thanks to its 3-nm and 5-nm technologies. On an adjusted basis, EPS came in at $2.24, beating estimates by 8 cents.
Taiwan Semiconductor serves as the go-to partner for leading tech giants developing GPUs and custom silicon. In 2024, its AI-driven revenue surged threefold, and it expects to double that figure in 2025 thanks to backing from hyperscalers and data centers.
Looking ahead, TSMC anticipates an approximate 20% compound annual growth rate in AI-related revenues over the next five years, driven by strong demand for its next-generation 2-nm and 3-nm process technologies.
For the first quarter of 2025, TSM management expects revenues between $25 billion and $25.8 billion, implying a 34.7% year-over-year increase at the midpoint. The gross margin is projected to be between 57% and 59%, demonstrating resilience amid industry-wide cost pressures.
Analysts have assigned a consensus ' Strong Buy ' rating with a lofty mean price target of $244.50, indicating an upside premium of more than 24% over current levels.
AI Stock #2: Alibaba
Valued at a hefty $315 billion by market cap, Alibaba (BABA) is an e-commerce giant operating diverse digital platforms and services. The company boasts several marketplaces, including AliExpress and Taobao, which cater to both international and domestic markets.
Over the past year, shares of this Chinese tech company have surged by 75% and have rallied over 50% in 2025 alone. This massive rally is linked to the company's strong performance in AI and cloud services, areas it has recently expanded into to drive operational efficiency and foster innovation across its vast ecosystem.
Despite this impressive performance, BABA stock still trades at a reasonable price. It is currently valued at 17.4x forward earnings.
On Jan. 20, BABA reported its Q3 earnings for fiscal year 2025, posting a sizable beat on the top line, although it missed on the earnings side. Nevertheless, shares surged by 8% after the stellar earnings report. Sales reached $38.3 million, marking an 8% year-over-year increase, while EPS of $2.77 missed estimates by 7 cents.
Alibaba's latest move to ramp up investments in cloud and AI technology marks a strategic shift. The firm is set to allocate more capital in these areas over the next three years than it has in the past decade, underlining its commitment to leveraging the emerging AI era. While this aggressive strategy promises substantial long-term growth, it could place pressure on near-term margins.
Wall Street expects Alibaba to increase sales to $138 billion in 2025 and $149 billion in 2026, while adjusted earnings are forecast to expand from $8.68 per share in 2025 to $9.77 per share in 2026.
Analysts maintain a ' Strong Buy ' rating on BABA stock, with an average price target of $146.84, implying an upside premium of around 9%.
AI Stock #3: Infosys
Valued at $83 billion by market cap, Infosys (INFY) is an Indian-based multinational IT services and consulting company known for its innovative technology solutions and digital transformation expertise that empower businesses worldwide.
Infosys shares are down more than 9% YTD, likely due to the broader market correction. However, the stock still trades at premium levels with 27.8x forward earnings, higher than the sector median of 22.9x.
In its third quarter of fiscal 2025, Infosys delivered a solid performance, with revenues climbing to $4.94 billion from $4.66 billion the previous year. Earnings per share reached $0.19, up from $0.18 cents. The company's strategic focus on digital transformation and generative AI has fostered steady revenue momentum.
Infosys also raised its fiscal 2025 revenue guidance to an anticipated growth range of 4.5-5.% on a constant-currency basis while forecasting operating margins between 20%-22%. These financial indicators reinforce its competitive positioning and growth potential.
In May 2023, Infosys unveiled its Topaz platform, an AI-first suite harnessing generative technology. CEO Salil Parekh also announced 50 active client projects, further reinforcing the firm's leadership in digital transformation.
Moreover, Infosys continues to expand its global footprint and technological capabilities, fueling sustainable revenue growth. The company is actively investing in advanced AI and cloud solutions to capture emerging market trends. Driven by strategic partnerships and innovative initiatives, Infosys is well-positioned to deliver strong long-term growth and enhanced shareholder value in the coming quarters.
Considering all of this, Wall Street has assigned a consensus ' Moderate Buy ' rating on INFY stock, with an average price target of $23.82, implying approximately 20% upside potential over current levels.
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