© Reuters
Investing.com – These are the biggest analyst moves in the artificial intelligence (ai) space this week.
InvestingPro subscribers always get the first feedback on market-moving ai analyst commentary. Update today!
UBS: Nvidia is “the only chip company that can create its own market”
On Thursday, UBS analysts raised their price target for Nvidia to $1,100 from $800 previously, emphasizing that the tech giant is “the only chip company that can create its own market.”
Following Blackwell's presentation and participation in several GTC sessions, UBS believes Nvidia (NASDAQ:) is poised to take advantage of a new surge in demand from both global companies and sovereign states.
Looking ahead, the investment bank predicts a year of significant growth for Nvidia in calendar 2025, with the company's revenue expected to approach $150 billion, representing an estimated 30% increase. .
This projection has led to an upward revision of both Nvidia's revenue forecasts and price target.
With the launch of Blackwell and NIM, a new software platform developed to streamline the deployment of custom, pre-trained ai models in production environments, UBS analysts anticipate a boost in Nvidia's ai solution offerings, stating that This “should also accelerate the distribution flywheel for NVDA’s ai solutions merge with enterprise software.”
“The entire framework creates a central distribution structure similar to an app store, and given the wide range of companies that can potentially license NVDA's ai Enterprise software ($4,500/GPU/year), the monetization can add up quickly.”
Rosenblatt raises Micron price target to highest level
Following its blockbuster report, an analyst at Rosenblatt significantly increased Micron's (NASDAQ ) price target from $140 to $225, suggesting over 100% upside potential from current levels.
“HBM3e alone will drive most of the structural DRAM shortage through 2025, with the new category almost entirely allocated by that year,” the analyst said in a note.
They highlighted a significant shift for Micron, projecting a jump in its market share in the HBM (high-bandwidth memory) sector from a negligible percentage to a low 20s, attributed to both industry shortages and the development of Micron of energy efficient solutions that outperform competitors.
By the end of FY24, Rosenblatt expects to see a reduction in wafer capacity, which peaked in FY22. This reduction, according to the analyst, will contribute to DRAM and NAND supply growth falling short of the increase in demand expected in mid-2024, which will lead to an increase in prices throughout the year.
Additionally, the analyst anticipates a sustained DRAM upcycle through 2026, driven by the ai server market's transition to more advanced HBM4 technology.
“Note that accelerator computing (Blackwell/Hopper, MI300, custom ASIC, and the like) will not scale without DRAM bit content AND performance (HBM), meaning the category is hopelessly price inelastic,” the analyst explained. .
“The memory cycle we are about to witness will be the largest in history, driven by an ai cycle that is revolutionizing computing in a secular way.”
The market is 'underestimating' Apple's Edge ai efforts – Morgan Stanley
Analysts at Morgan Stanley said this week that the market is currently “underestimating Apple's Edge ai initiatives,” which could act as a potential catalyst for the stock going forward.
Reaffirming an Overweight rating with a $220 price target for Apple (NASDAQ:), the company sees a favorable risk-reward ratio at the current share price.
They believe upcoming generative ai solutions “can more than offset other commonly cited investor concerns (China lawsuit, Justice Department lawsuit) to catalyze outperformance.”
Although Morgan Stanley acknowledges that overcoming the current negative market sentiment (stemming from concerns about demand in China and the ongoing antitrust lawsuit) may take time, they are optimistic about the future.
Analysts highlighted Apple's early June developer conference and the iPhone 16 launch in mid-September as potential catalysts for the stock.
According to them, these events “may improve investor sentiment and revitalize the bullish stance, as the exciting new ai features built into the iPhone 16 can catalyze an iPhone refresh cycle – historically a key driver of outperformance.” and accelerate spending on products/services per user as Apple becomes a leader in Edge ai.”
Redburn demotes MongoDB and Snowflake for lack of 'clear GenAI advantage'
Analysts at Redburn Atlantic have downgraded Snowflake (NYSE and MongoDB (NASDAQ to sell from Neutral earlier in the week, saying the companies “lack a clear Gen-ai advantage, posing a budget reallocation risk that their current valuations do not reflect.”
According to Redburn, the real potential of generative ai extends beyond notable consumer applications.
While Big tech can cover initial training costs, the true value is seen in adapting these technologies to companies. However, this customization comes with high costs and complexity, requiring long integration periods, ultimately resulting in substantial and long-lasting benefits.
“In this new era, the focus shifts from sheer volume of data to accessibility and quality. While companies aim to leverage existing data, the high-quality synthetic data that resides in some models is often overlooked,” the analysts said in the note.
“Enterprise adoption of Gen-ai is not a universal victory. We expect budget reallocation risks for players without clear and direct exposure to the new stack. “Those who are in a position to deliver tangible benefits from Gen-ai are the best positioned.”
ai beneficiary correction is a buying opportunity – UBS
UBS strategists believe the recent decline in ai-related technology stocks presents an investment opportunity, they said in a note published Monday.
After a surge in early March, fueled by enthusiasm over the commercial prospects of ai, tech stocks have faced a slide.
On March 15, the Philadelphia Semiconductor Index and the S&P 500 Semiconductor and Semiconductor Equipment Index saw a drop of more than 6% in six sessions, reflecting revised economic expectations among investors.
Despite this, UBS does not consider this drop to be indicative of a long-term concern.
“We believe price corrections in major ai beneficiaries could present investors with a buying opportunity as we expect ai companies to continue to benefit from infrastructure development and transparent corporate spending intentions,” the analysts said. UBS strategists.
“We believe that generative ai will be the growth theme of the decade. With estimated revenue growth for the ai industry of around 70% each year through 2027, we forecast strong profit growth and higher stock prices in the coming years for the next ai leaders.”
UBS recommends expanding tech portfolios beyond the Magnificent 7, citing the tech crisis as an opportunity for diversification. They suggest investing in emerging ai leaders, including custom ai chip makers, ai edge computing companies in Asia, and major semiconductor capital equipment companies, to mitigate the risks of excessive market concentration.
