Asia Tech Wire (Aug 6) -- Morgan Stanley has made TSMC a top pick after a huge sell-off, according to Bloomberg.

Despite the fact that TSMC just experienced a record selloff, Morgan Stanley continues to be bullish on the stock.

Morgan Stanley listed TSMC as a top pick, citing the stock's attractive valuation following recent weakness, the report said.

"We like TSMC's quality and defensive nature during an elongated semi downcycle," Morgan Stanley analyst Charlie Chan wrote in a report.

He also noted that "confirmation of price increases and continued strength in artificial intelligence (AI) capex should be key catalysts for [TSMC]."

Chan expects that with the price hikes, "TSMC should be able to achieve a gross margin of over 55% in 2025 and, after realizing economies of scale in its overseas fabs, gradually approach a gross margin level of 60% from 2028 to 2030."

As Morgan Stanley released the report, TSMC's shares closed down nearly 9.8% in Taipei on Monday, marking the biggest one-day drop since its IPO.