Investing.com -- Morgan Stanley analysts expect shares in Taiwan Semiconductor Manufacturing (NYSE:TSM) (TWO:5425) (TSMC) to see volatility following the company’s upcoming Q1 analyst meeting on April 17, especially after its expected comments on semiconductor tariffs, the sustainability of AI demand, and the potential of a joint venture with Intel (NASDAQ:INTC).

The bank expects the world’s largest contract manufacturer to maintain its 2025 revenue growth forecast at mid-20% year-over-year with a steady capital expenditure of $40 billion, as it believes that it is too early for TSMC’s clients to assess the impact of tariffs.

“AI demand remains healthy, and TSMC will still double its CoWoS capacity in 2025, according to the company,” Morgan Stanley analysts led by Charlie Chan said in a note.

For the second quarter of 2025, the analysts forecast TSMC to guide a 3-5% quarter-over-quarter growth in U.S. dollar terms, with a slight decrease in gross margin to 58%.

Morgan Stanley outlines three possible outcomes from the meeting, each carrying different upside potential for stock prices.

The first scenario involves TSMC gaining an exemption from semiconductor tariffs following its $165 billion investment in U.S. fabrication operations, which could result in a 7% increase in TSMC’s share price. The bank sees a potential upside of 7% should this materialize.

The second scenario, which carries 2% upside potential and is also Morgan Stanley’s base case with a 60% probability, sees TSMC maintaining its revenue growth forecast for 2025 and experiencing a 2% rise in its share price.

The third scenario, which could lead to an 8% decline in share price, involves TSMC lowering its revenue growth projection to low-20% year-over-year and considering an Intel joint venture due to tariff pressures.

This outcome could send TSMC shares down as much as 8%, according to analysts’ estimates.

In the base-case scenario, TSMC is expected to keep its 2025 revenue and capex guidance unchanged, albeit with reduced visibility.

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