U.S. investment bank Morgan Stanley (MS) is pounding the table on Chinese artificial intelligence (AI) company Tuya (TUYA), urging investors to buy the stock ahead of earnings on Feb. 26.
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Heading into the company’s print, Morgan Stanley reiterated its Buy-equivalent overweight rating on TUYA stock and raised its price target on the shares to $3 from $2.30. In a note to clients, the bank said that “strong revenue growth momentum” is likely to continue at Tuya, adding “we think it leaves significant room for the share price to catch up with value.”
Morgan Stanley added that Tuya, which trades on the New York Stock Exchange, is a great way for investors to gain exposure to China’s fast-growing AI sector. Tuya is both an AI and Internet of Things (IoT) platform as a service (PaaS) provider that was founded in 2014. The company provides a cloud platform that developers can use to create and manage AI and IoT technologies.
Hot Stock
While still little known outside of China, Tuya’s stock has been on fire this year following the emergence of Chinese AI app DeepSeek, which is as powerful as any created by western tech giants such as Alphabet (GOOGL) but made for a fraction of the cost.
The launch of DeepSeek has forced analysts and investors to re-evaluate China’s AI capabilities and begin funneling capital to Chinese companies involved in the sector. Consequently, Tuya’s stock has been on fire, rising 67% so far this year. Yet, Tuya remains both a small-cap and penny stock with a market capitalization of only $1.80 billion.
Morgan Stanley says investors would be smart to grab TUYA stock before the next leg higher that’s likely to follow the company’s upcoming financial results, and as Tuya becomes a leading player in Chinese AI.
Is TUYA Stock a Buy?
Given its status as a micro-cap stock, most Wall Street firms do not offer ratings or price targets on TUYA stock. So instead, we’ll look at its three-month performance. As one can see in the chart below, Tuya’s share price has gained 89% over the past 12 weeks.
