Investing.com – Here are the biggest moves in artificial intelligence (AI) analysts this week.
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Nvidia (NASDAQ:) stock downgraded by New Street Research
Analysts at New Street Research downgraded Nvidia’s rating from Buy to Neutral on Friday.
In a note to clients, the research firm said current consensus expectations call for GPU revenue to grow 35% in 2025, in line with its previous forecast. The analysts said they see “limited upside based on what we’re hearing from the value chain.”
“We are downgrading the stock to Neutral today because the upside will only materialize in a bullish scenario, in which the outlook beyond 2025 increases significantly, and we are not yet convinced that this scenario will play out.”
New Street noted that the consensus expects revenue growth to slow through the mid-1990s, which could be at risk from potential cuts in large-scale capital spending and increasing competition from ASICs and AMD (NASDAQ:).
Analysts said that without a change in outlook, they do not see further upside for the stock. They warned of the risk of a potential downgrade, noting that the stock currently trades at 40x trailing-twelve-month earnings per share (NTM EPS), compared to a low of 20x when growth slowed to 10% in 2019, before rebounding to 35x.
New Street values Nvidia at 35x earnings, which is consistent with the multiple seen in late 2019 and early 2020. With EPS estimated at $4.1 in 2027, this translates into a price target of $143 in 2026, suggesting limited upside over the next two years.
New Street has set a one-year price target for NVDA at $135.
“The quality of the franchise is nevertheless intact, and we would be buyers again, but only in the event of prolonged weakness,” the analysts write.
UBS cuts Pure Storage (NYSE:) to sell, ‘giving too much credit to AI’
All-flash data storage solutions provider Pure Storage saw its stock downgraded 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, a high valuation and “too much credit given to AI.”
Analysts expect PSTG’s growth to slow to about 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, with Pure’s share of the all-flash storage market having fallen about 80 basis points to 14.5% over the past twelve months as rivals like NetApp’s (NASDAQ:) C-Series gain ground with enterprise customers.
Separately, UBS noted the stock’s significant gain of around 83% year-to-date, versus a 15% gain for the stock, despite a 1% cut in revenue guidance for fiscal 2025 and 2026.
Finally, analysts mentioned that while investments in AI infrastructure have boosted PSTG’s valuation, “AI storage spending will likely be slower than the market expects and more tied to inference, a slower-growing market than training.”
Dell, new top pick at BofA
Bank of America analysts have added Dell to their US 1 list, a selection of the bank’s best 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 through 2025. The bank highlighted factors including demand for AI servers, demand for storage with expected value IBM (NYSE:) mainframe refresh and demand for early PC refresh.
“Dell Technologies (NYSE:) World 2024 took place May 20-23, where Dell introduced Dell AI Factory and expanded its AI portfolio with 5 new AI PCs, all-flash file storage, network architecture, and AI service offerings,” the BofA team notes.
“We see these new products supporting Dell’s growth in the 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:) nears AI inflection point
Amazon is about to hit a key inflection point in AI, Mizuho analysts said in a note this week, citing a recent customer survey with a major distribution partner.
The survey highlighted several trends suggesting accelerated growth for Amazon Web Services (AWS).
“We are seeing an acceleration in the sales cycle due to increased demand for ECB meetings and gradual exits from data center contracts,” the note said. Companies are finalizing proposals and paying upfront for contracts to exit data centers, accelerating the AWS sales cycle.
While infrastructure spending remains dominant, Mizuho said that “cost optimization is being offset by new services such as application monitoring, chatbot deployments, and large-scale migration programs.” This shift indicates a shift toward higher-value services on AWS.
The most exciting development, according to Mizuho, is the advancement of generative AI projects.
“The survey shows that externally facing 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 broad external customer base.
Bank of America raises PT on European chip stocks
Bank of America has raised its price targets for several European chipmakers, citing continued strong demand for AI.
The bank’s analysts raised their targets for several semiconductor equipment and subsystems suppliers, including Nokia (HE:), Nordic Semiconductor (OL:), Technoprobe and Comet.
Nokia’s target is now €3.96, up from €3.58, reflecting “AI optionality.” Nordic Semiconductor’s target was raised to NOK169 from NOK161, supported by improving end-use demand and higher estimates. Technoprobe’s target is set at €10.60, up from €9.40, reflecting its unique exposure to AI. Comet’s target was raised to CHF448 from CHF409.
However, BofA cut Aixtron’s target from €25 to €20.5 due to lower expectations for gallium nitride (GaN), silicon carbide (SiC) and MicroLED.
ASML (AS:) remains a top pick among semi-caps for BofA, due to the increased lithography intensity required for AI chips.
