Investing.com - Taking a position in TSMC shares could be a way of trading Nvidia’s earnings, ahead of Wednesday’s release, according to Morgan Stanley.

The U.S. investment bank said, in a note dated Feb. 18, that Taiwan Semiconductor Manufacturing (NYSE: TSM) is the sole supplier for Nvidia's (NASDAQ: NVDA) artificial intelligence graphics cards, and thus Nvidia’s guidance for the April quarter could be a key catalyst.

Morgan Stanley assigns a 20% probability that Nvidia’s quarterly guidance comes in above buy-side expectations of $24 billion, and expects TSMC’s shares to rise around 5% as a result.

It says there is a 60% chance that the guidance is in line with the $22-$24 billion expectations, which could be TSMC gains of up to 3%, while there’s a 20% chance that the guidance is below $22 billion, which would cause TSMC’s stock to fall 2%.

The bank has an ‘overweight’ rating on TSMC’s stock, with a 12-month price target of NT$758, offering around 11% upside from its current price.

Its stock closed 0.7% lower Monday at NT$678.