Investing.com – Here are the top moves by analysts in the artificial intelligence (ai) space this week.
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New Street Research downgrades Nvidia (NASDAQ:) stock
Analysts at New Street Research downgraded Nvidia from Buy to Neutral on Friday.
In a note to clients, the research firm said current consensus expectations project GPU revenue to rise 35% in 2025, which is in line with its previous forecast. The analysts said they see “limited further upside based on what we hear from the value chain.”
“We are downgrading the stock to Neutral today as upside will only materialize under a bullish scenario, where the outlook beyond 2025 increases substantially, and we are not yet convinced that this scenario will materialize.”
New Street noted that consensus expects revenue growth to slow to around 15%, which may be at risk due to potential reductions in hyperscale capital expenditures and increasing competition from ASICs and AMD (NASDAQ:AMD).
Analysts said that without a change in outlook, they see no further room for the stock to rise. They warned of the risk of a potential downgrade, noting that the stock currently trades at 40 times next-twelve-month (NTM) earnings per share (EPS), compared with a low of 20 times when growth slowed to 10% in 2019, before recovering to 35 times.
New Street values Nvidia at 35 times earnings, in line with the multiple seen in late 2019 and early 2020. With an estimated EPS of $4.1 in 2027, this translates to a price target of $143 in 2026, suggesting limited upside over the next two years.
New Street set a one-year price target for NVDA at $135.
“The quality of the franchise is intact and we would buy again, but only in the event of prolonged weakness,” the analysts wrote.
UBS downgrades Pure Storage (NYSE:) to sell over 'too much credit given to ai'
Shares of all-flash data storage solutions provider Pure Storage received a rating downgrade from Neutral to Sell at UBS earlier this week.
The investment bank highlighted an unfavorable risk-reward profile for the stock, citing slowing growth, declining market share, high valuation and “too much credit given to ai.”
Analysts expect PSTG’s growth to slow to around 8% over the next five years, down from 16% over the past five years. They expect the company’s all-flash storage market share to stabilize at around 15%. UBS’s revenue projections for fiscal 2026 and 2027 are 6% and 10% below consensus, respectively.
The downgrade also reflects a decline in market share: Pure's share of the all-flash storage market has fallen roughly 80 basis points to 14.5% over the past twelve months, while competitors such as NetApp's (NASDAQ:) C-Series are gaining ground among enterprise customers.
In addition, UBS highlighted the stock's significant rise, around 83% so far this year, compared with a 15% rise in , despite a 1% drop in revenue expectations for fiscal years 2025 and 2026.
Finally, the analysts mentioned that while investments in ai infrastructure have boosted PSTG's valuation, “ai-related storage spending will likely be slower than the market expects and will be more closely tied to inference, a slower-growing market than training.”
Dell is the new top pick at BofA
Bank of America analysts have added Dell to their US 1 list, a selection of the bank's top investment ideas.
In a note to clients, Bank of America raised its price target for Dell shares to $180 from $130, citing a positive outlook for the company going into 2025. The bank highlighted factors such as demand for ai servers, storage demand from an expected IBM (NYSE:) mainframe upgrade and demand for early PC upgrade.
“Dell Technologies (NYSE:) World 2024 took place May 20-23, where Dell unveiled the Dell ai Factory and expanded its ai portfolio with 5 new ai PCs, all-flash file storage, network architecture and ai services offerings,” the BofA team noted.
“We see these new products supporting Dell's growth in C25,” he added.
The brokerage firm also mentioned that Dell's potential inclusion in the S&P 500 is another catalyst for the stock.
Mizuho: amazon (NASDAQ:) is approaching the ai tipping point
amazon is close to reaching a key inflection point in artificial intelligence, Mizuho analysts said in a note this week, citing a recent customer survey with a major channel partner.
The survey highlighted several trends that suggest accelerated growth for amazon Web Services (AWS).
“We are seeing an accelerated sales cycle due to increased demand for ECB meetings and incremental exits from data center contracts,” the note writes. Companies are finalizing proposals and prepaying for contracts to exit data centers, accelerating the AWS sales cycle.
While infrastructure spending remains dominant, Mizuho said that “cost optimization is offset by new services such as application monitoring, chatbot deployments, and large migration programs.” This shift indicates a trend toward higher-value services on AWS.
The most exciting development, according to Mizuho, is progress on generative ai projects.
“The survey shows that external models (20% of the total) are only 6 months away from commercial deployment,” the note says, implying a potential increase in inference activity as these models are deployed to a large base of external customers.
BofA raises European chip prices
Bank of America has raised its price targets for several European chipmakers, boosted by continued strength in ai demand.
Analysts at the bank raised their targets for several semiconductor subsystem and capital equipment (semicaps) suppliers, including Nokia (HE:), Nordic Semiconductor (OL:), Technoprobe and Comet.
Nokia’s target price is now €3.96, up from €3.58, reflecting the “optionality of ai.” Nordic Semiconductor’s target price was raised from NOK 161 to NOK 169, thanks to improved end demand and higher estimates. Technoprobe’s target price is set at €10.60, up from €9.40, due to its unique exposure to ai. Comet’s target price was raised from CHF 409 to CHF 448.
However, BofA lowered Aixtron's target to €20.5 from €25 due to lower expectations for gallium nitride (GaN), silicon carbide (SiC) and MicroLED.
ASML (AS:) remains a top pick among semi-cap stocks for BofA, driven by the higher lithography intensity needed for ai chips.
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