Asia Pacific Three Actionable Ideas Report Interpretation

Overview

Morgan Stanley’s weekly Asia Pacific selection identifies three high-conviction equity ideas: CATL, MediaTek and Gulf Development. The calls are based on distinct catalysts in battery-market expansion, cloud AI ASIC revenue growth and AI-related power infrastructure.

Core views

CATL (300750.SZ) is selected as a new Top Pick. Morgan Stanley argues that accelerated capacity expansion into new, lower-end markets should still contribute incremental profits. The report stresses that overall dollar-per-Wh margin should not be the main focus during this deliberate shift, because the margin outcome is driven by changing sales mix rather than solely by underlying profitability. For MediaTek (2454.TW), Morgan Stanley expects 3Q26 to be the bottom of the company’s transition toward a Cloud AI ASIC revenue cycle. It expects a strong TPU revenue ramp beginning in 4Q26 and forecasts that this revenue stream will represent more than half of MediaTek’s revenue by the end of 2027. The underlying thesis is therefore a shift away from the near-term weak smartphone backdrop toward a larger cloud-AI contribution. Gulf Development (GULF.BK) is also a new Top Pick. Morgan Stanley argues that US hyperscalers’ need for AI power infrastructure in Asia could create an opportunity analogous to a regional “US shale revolution,” especially given domestic pushback faced by US infrastructure expansion. It also points to higher tiered local power pricing in Thailand and expects deleveraging to progress. The publication explains that “Three Actionable Ideas” is a weekly Monday report selecting three high-conviction Asian research calls, including Japan. The Research Product team selects ideas after gathering feedback from Equity Sales, Cross Product and Content teams; analysts must articulate differentiated calls and near-term catalysts. As of July 28, 2026, the programme reported 1,527 ideas, 6,502 basis points of cumulative outperformance versus local benchmarks, a 3.8% average holding-period total return and a 1.7% average relative return. These performance figures exclude transaction costs, are unaudited and are not a guarantee of future results.

Analysis framework

Morgan Stanley selects three weekly ideas after internal investor-feedback canvassing and review of analysts’ differentiated theses and immediate catalysts. It tracks the programme using local-currency total return, relative performance versus local benchmarks, holding-period returns and hit ratios.

Methodology notes

• Other

  Weekly high-conviction idea selection and benchmark-relative performance tracking

  The report selects ideas based on differentiated analyst views and catalysts, then measures total return in local currency and outperformance against local benchmarks over the relevant holding period.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• CATL (300750.SZ)

  Battery capacity expansion into lower-end markets is expected to add incremental profit.

  Strengths

  Accelerating capacity expansion and a deliberate market-share strategy.

  Weaknesses

  Overall dollar-per-Wh margin may be pressured or distorted by sales mix.

  Risks

  Margin should be interpreted in the context of mix changes.

• MediaTek (2454.TW)

  Cloud AI ASIC and TPU revenue are expected to become a major growth driver.

  Strengths

  Morgan Stanley expects a strong TPU revenue ramp from 4Q26 and more than half of revenue from this stream by end-2027.

  Weaknesses

  Near-term smartphone conditions are weak during the transition.

  Risks

  The timing and scale of the Cloud AI ASIC revenue ramp are central to the thesis.

• Gulf Development (GULF.BK)

  Potential beneficiary of growing AI power-infrastructure requirements in Asia.

  Strengths

  Exposure to hyperscaler demand, higher local tiered power pricing in Thailand and expected deleveraging.

  Comparison

  The report compares the potential regional infrastructure opportunity to the US shale revolution.

  Risks

  The thesis depends on hyperscaler infrastructure demand and deleveraging progress.

Key data

• Three Actionable Ideas cumulative outperformance6,502 bpsAgainst local benchmarks as of July 28, 2026.
• Number of ideas1,527Programme total as of July 28, 2026.
• Average holding-period total return3.8% absolute; 1.7% relativePerformance when an idea was effective.
• Average 12-month total return9.3% absolute; 5.7% relativeAverage for all ideas, closed and active, from July 28, 2025 to July 28, 2026.
• MediaTek Cloud AI ASIC revenueMore than half of revenue by end-2027Morgan Stanley expectation, with strong TPU ramp beginning in 4Q26.
• Latest closing pricesCATL Rmb395.30; MediaTek NT$3,235.00; Gulf Development Bt66.75As of July 31, 2026.

Impact & implications

The report frames the three selections as separate, high-conviction opportunities tied respectively to battery-market expansion, cloud AI semiconductor demand and AI-related Asian power infrastructure. Morgan Stanley emphasizes that the ideas are chosen independently rather than as a combined portfolio.

What to watch

• CATL’s capacity expansion into lower-end markets and the resulting sales-mix effect on dollar-per-Wh margins.
• MediaTek’s 3Q26 transition point and TPU revenue ramp from 4Q26.
• Whether Cloud AI ASIC revenue exceeds half of MediaTek revenue by end-2027.
• Asian hyperscaler AI-power infrastructure demand, Thai tiered power pricing and Gulf Development’s deleveraging progress.