Texas Instruments (TXN) seems confident to handle the uncertainty linked with tariffs, Morgan Stanely said Thursday in a research note.

The bank noted that the semiconductor company has been growing its market share footprint in China for multiple years. However, on its first-quarter earnings call, the company clarified that "multiple years of recent capex has been entirely focused on the US."

Citing uncertainty due to tariffs, the bank does not expect demand to improve, reflected somewhat in the first quarter results as well.

However, the bank also notes that "with two years of very substantial inventory reduction, extremely lean inventory levels are just not sustainable in a world where suddenly everyone needs geographic multi-sourcing as the foundation moves beneath our feet."

Texas Instruments' better-than-expected Q1 results offset factors of cycle strength versus demand uncertainty, the bank said.

The bank also said it remains worried about general management support and cash flow to "stay weaker for longer, with idiosyncratic tariff risk."

The bank raised the price target on the company to $148 from $146, while maintaining the underweight rating.

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