Investing.com – Here are the top moves by analysts in the artificial intelligence (ai) space this week.
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BofA on Nvidia stock: 'Attractive growth at an attractive valuation'
This week, Bank of America reiterated its Buy rating on NVIDIA Corporation (NASDAQ:NVIDIA), highlighting its “attractive growth at an attractive valuation.”
Despite some near-term headwinds, BofA analysts view these challenges as an attractive buying opportunity.
Nvidia is currently facing delays to its Blackwell product line, potential regulatory scrutiny from a Justice Department antitrust investigation, and broader market issues such as poor seasonality and interest rate concerns. However, BofA believes these factors could increase the stock's upside potential, particularly given its valuation.
The stock is trading at roughly 27 times its expected calendar year 25 price-to-earnings (P/E) ratio, putting it in the lower quartile of its five-year range, which BofA views as a favorable entry point.
Despite Blackwell’s delays, BofA highlights Nvidia’s steady growth, driven by demand for its previous-generation Hopper chips. The bank also notes that Nvidia’s ai products “have consistently outperformed industry benchmarks,” indicating that the company’s dominance in ai is unlikely to fade.
BofA is particularly optimistic about Nvidia’s role in the next generation of large language models (LLMs), including OpenAI’s GPT-5 and Meta’s Llama 4, which are expected to bring significant advances in ai capabilities.
“Capital spending on ai not only creates new business opportunities, but is also critical to protecting existing competitive advantages and large profit pools in search, social, and enterprise (chat, copilot) workloads,” the BofA team adds.
The company views Nvidia as a top pick in the tech sector, and supply chain updates in the coming weeks are likely to serve as a key catalyst for recovery for the stock.
Microsoft and Adobe join WF's 'Signature Pick' portfolio
Wells Fargo has added Microsoft Corporation (NASDAQ:) and Adobe Systems Incorporated (NASDAQ:) stocks to its “Signature Picks” portfolio.
Analysts revealed in a note Wednesday that they had opened a 4% position in Microsoft, citing the company's “cloud positioning and leadership (in artificial intelligence).”
They highlighted that ai has been a key factor in driving second-half strength in Microsoft's Azure cloud division.
Analysts also initiated a 2% position in Adobe, noting that “design is one of the most tangible use cases” for generative ai.
They added that concerns about competition in this space are “overblown” and stressed that “Adobe's competitive advantage remains strong.”
ai stocks are not in a bubble but concentration risks are high
In a note Thursday, Goldman Sachs strategists dismissed concerns that the ai sector is in a bubble, though they caution that concentration risks remain high due to the dominance of a few large-cap companies.
Since 2010, the technology sector has accounted for 32% of global equity returns, driven by strong fundamentals and the introduction of transformative technologies such as ai. Despite rapidly rising valuations, Goldman believes ai is likely to “continue to dominate returns,” rather than signal a bubble.
The report singles out the “Magnificent Seven” – major US tech companies such as Apple (NASDAQ:), Microsoft and Nvidia – as now holding significant market share.
These companies, backed by strong earnings and significant investments in artificial intelligence, show no signs of the irrational exuberance seen in past bubbles, such as the dot-com boom of the late 1990s. Their profitability and cash flows justify their valuations, which remain well below tech bubble levels.
However, Goldman warns that market concentration is at historic levels. The top 10 companies now account for more than a third of the index, while the five largest companies account for 27% of the index's total value.
Strategists are raising the question of whether this ai-driven surge in tech stocks could be approaching bubble territory, or whether the concentration of power in a few companies is creating a “dangerous trap” for investors.
On the other hand, this concentration could offer an “opportunity to diversify towards potential beneficiaries of these technologies through cheaper companies outside the few dominant ones,” the note adds.
Mizuho adds Micron and Oracle stocks to its list of top picks
Mizuho analysts added Micron technology Inc (NASDAQ:) and Oracle Corporation (NYSE:) to their Top Picks list, the investment bank's pick of high-conviction, catalyst-driven ideas.
Analysts expect Micron, a key player in the ai boom, to benefit from improved DRAM and NAND pricing, with ai-related tailwinds boosting its HBM market share. Micron’s partnership with NVIDIA, in particular, is expected to support these gains.
Mizuho expects HBM3E to capture around 70% of the HBM market by 2025, with Micron remaining a major supplier for NVIDIA’s ai GPU lineup. This could drive HBM share growth during the second half of 2024 and into 2025. Analysts also anticipate that ai devices will require twice as much DRAM and NAND content compared to traditional devices by 2025.
While a yield issue with Micron’s HBM impacted margin expansion in the November quarter, Mizuho analysts believe margins could improve by 2025 as HBM accounts for a larger share of revenue and DRAM and NAND utilization rates increase.
“We believe corrections in most consumer end markets are nearly complete, but demand headwinds remain as mobile and PC upgrade cycles appear longer than in previous years,” they noted.
Regarding Oracle, Mizuho believes the company's cloud infrastructure (OCI) is undervalued.
Its competitive pricing, approximately 33% lower than AWS, positions Oracle to capture more enterprise customers as it transitions from on-premises to cloud solutions. Analysts expect Oracle’s strong on-premises customer base to serve as a major revenue driver.
They are also confident that Oracle can expand its operating margins to 45% by fiscal year 2026 through “cloud margin expansion, sales and R&D efficiencies, and leverage of scale.”
JPMorgan downgrades SMCI shares due to regulatory uncertainty and competitive pressures
JPMorgan analysts downgraded Super Micro Computer (NASDAQ:) to Neutral from Overweight on Friday, and the company's shares fell more than 3% in after-hours trading.
Analysts stressed that while they remain confident in Super Micro's ability to regain compliance with regulators, near-term uncertainty is a key factor in the rating change.
They explained that “a short-term view is that there is no clear justification for new investors to enter SMCI shares while there is uncertainty around regaining compliance with regulators which is critical beyond unchanged business fundamentals.”
JPMorgan also expressed concern about the company’s potential response to competitive pressures in the ai server market. Analysts noted that aggressive pricing to retain customers could hurt margins, potentially prompting a competitive response from peers.
The firm believes that while meeting regulatory requirements could serve as a positive catalyst, investors are likely to wait for clearer signs that customer demand and margin prospects remain stable before fully committing.
Given these uncertainties, JPMorgan advises new investors to wait to take positions until the company regains regulatory compliance.
The company also lowered its December 2025 target price to $500 from $950, reflecting a lower earnings multiple more in line with traditional IT hardware companies, which typically experience slower growth.
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