Investing.com – These are the biggest analyst moves in the area of artificial intelligence (ai) this week.
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Evercore: Nvidia stock split could be a catalyst for volatility
Nvidia (NASDAQ ) stock will begin trading on Monday on an adjusted split basis, and according to Evercore analysts, the 10-for-1 split could act as a potential catalyst for further market volatility.
Following Nvidia's May 22 earnings report, which included the announcement of the stock split effective June 10, Nvidia shares rose 20.9% in four sessions, while the S&P 500 index fell one 0.75%. The Evercore team said this divergence in performance between the two was “unprecedented.”
The investment firm noted that similar past events also led to notable shifts in momentum and increased volatility. One of those “extreme” episodes occurred on August 31, 2020, amid the stock splits of Apple (NASDAQ and Tesla, when an equally strong market rally led by the Nasdaq 100. Analysts said the changes in Momentum around the effective dates of the split were substantial.
“The result in late 2020 was increased downsides, market volatility, and a rotation of leadership from NDX/Growth stocks to small caps,” they wrote.
Now, with the June 10 Nvidia split likely to “change the narrative” along with other catalysts like the new jobs report, CPI and FOMC data and Trump's ruling, Evercore advised investors to prepare for greater volatility.
Bank of America raises ASML stock price target to street high
Analysts at Bank of America on Thursday raised their price target on ASML (NASDAQ to a new Wall Street high of €1,302, saying they are increasingly confident the European semiconductor giant can achieve €40 billion in revenue by 2025.
ASML, which is also a Top Pick at BofA, was described as a “critical enabler” of building ai infrastructure.
BofA increased its revenue for calendar years 2025 and 2026 and its EPS estimates for ASML by 6% to 9%, reflecting “increased confidence in higher demand for EUV tools as well as higher GM.”
“Our new revenue estimates for CY25/26E are 10% to 7% above css, while our EPS estimates are 15% to 9% above css,” BofA analysts wrote .
“ASML remains our first choice in EU Semicaps,” they added.
BofA acknowledged concerns about foundry orders through the end of the year, but believes investment by major hyperscalers and enterprise customers in ai infrastructure indicates a clear need for significant capacity additions at the forefront.
Argus upgrades HPE to Buy on growing opportunities in ai space
Analysts at Argus Research raised their rating on HP enterprise stock (NYSE from Hold to Buy, setting a price target of $26.
The investment firm cited the company's strong positioning and growing opportunities in the ai space as key factors for the upgrade.
Hewlett Packard Enterprise (NYSE ), a provider of edge-to-cloud solutions, beat consensus revenue and non-GAAP earnings per share (EPS) estimates for the fiscal first quarter of 2024 and offered positive future guidance.
Argus analysts said HPE continues to generate strong revenue from ai servers and its overall computing business is now showing signs of recovery. Cumulative orders for ai systems and services reached $4.6 billion as of mid-fiscal 2024.
“While HPE continues to anticipate a double-digit year-over-year decline in FY24 earnings, the company expects to grow revenue and, in our view, is positioned for future sales and earnings growth,” they wrote.
Deutsche Bank raises Adobe price target despite disappointing GenAI monetization
Also this week, design software maker Adobe (NASDAQ:) received a vote of confidence from Deutsche Bank analysts, who reiterated their Buy rating on the stock and raised the price target to $650.
They note that Adobe is headed to its second-quarter earnings on June 13, with the stock currently under pressure due to competitive concerns and disappointing near-term generative ai (genAI) monetization.
“We expect DM NNARR (developed market net new annual recurring revenue) to outperform, with Q2 estimates currently subseasonal, although we have less conviction on the magnitude of the increase given price noise and lack of market monetization. generative credit,” the bank's analysts said.
“We expect investors to take advantage of comments on NNARR ex-price growth to get a sense of underlying momentum, as year-on-year net price headwinds persist into the second quarter,” they added.
Deutsche also highlighted early positive momentum in Express for Enterprise and strong early growth in monthly active users (MAU) for the recently launched Express mobile app with Firefly, which supports the expansion of Adobe's top-of-funnel efforts.
Despite this, the bank does not expect significant contributions from generative credit packages until higher-end generative models such as 3-D, video and animation become widely available.
BofA: Semiconductor industry set for multi-year growth as ai boom progresses
Bank of America predicts a multi-year boom for the semiconductor industry, driven by growing demand for ai. Observations from Computex, a technology trade event, signaled a global push toward ai across several sectors, BofA analysts noted.
“We see the semiconductor industry poised for multi-year growth, with tech titans betting on ai at Computex,” they said.
The bank highlighted the growing presence of ai in data centers, edge computing, PCs and smartphones, requiring larger semiconductor dies to handle the growing data and processing power. The rapid pace of innovation supports this demand, as evidenced by the annual product development cycles of AMD (NASDAQ:) and NVIDIA.
Additionally, BofA also highlighted ARM's projection of a substantial increase in ai-ready devices, anticipating more than 100 billion ARM units capable of running ai by the end of 2025.
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