Investing.com – Here are the biggest artificial intelligence (AI) analyst moves 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, and according to Evercore analysts, a 10-for-1 split could serve as a potential catalyst for increased market volatility.
Following Nvidia's earnings report on May 22, which included the announcement of a stock split effective June 10, Nvidia shares rose 20.9% over four sessions while the S&P 500 fell 0.75%. The Evercore team said that this disparity in performance between the duo was “absolutely unprecedented.”
Similar past events have also led to notable shifts in momentum and increased volatility, the investment firm noted. One such “extreme” event occurred on August 31, 2020, amid the Apple (NASDAQ:) and Tesla stock splits, when the market saw a similarly strong rally led by the Nasdaq 100. Momentum shifts around the split effective dates were significant, analysts said.
“The result in late 2020 was increased downtrend, market volatility, and a rotation of leadership from NDX/Growth to small-cap stocks,” they wrote.
Now, with Nvidia's June 10 split potentially “changing the narrative” along with other catalysts like the new jobs report, CPI data, FOMC data and Trump's sentencing, Evercore advised investors to brace for more volatility.
Bank of America raises ASML stock price target to street high
Bank of America analysts on Thursday raised their target price on ASML (NASDAQ:) stock to a new Wall Street high of €1,302, saying they have become more confident that the European semiconductor giant can generate €40 billion in revenue by 2025.
ASML, which is also a BofA Top Pick, has been described as a “critical enabler” for building AI infrastructure.
Bank of America increased its calendar-year 2025 and 2026 revenue and EPS estimates for ASML by approximately 6% to 9%, reflecting “higher confidence in higher demand for EUV instruments as well as higher GM.”
“Our new CY25/26E revenue estimates are 10-7% higher than CSS, while our EPS estimates are 15-9% higher than CSS,” Bank of America analysts wrote.
“ASML remains our best option in EU Semicaps,” they added.
Bank of America acknowledged concerns about foundry orders through the end of the year but believes investment from leading hyperscalers and enterprise customers in AI infrastructure indicates a clear need for significant capacity additions at the forefront.
Argus upgrades HPE to buy thanks to growing opportunities in artificial intelligence
Analysts at Argus Research raised their rating on HP (NYSE:) Enterprise stock from Hold to Buy, setting a price target of $26.
The investment firm cited the company's strong position and growing opportunity in artificial intelligence as key factors for the upgrade.
Hewlett Packard Enterprise (NYSE:), an end-to-end solutions provider, beat consensus revenue and non-GAAP earnings per share (EPS) estimates for fiscal first quarter 2024 and provided positive forward-looking guidance.
HPE continues to generate strong revenue from AI servers, and its end-to-end compute business is now showing signs of recovery, Argus analysts said. Cumulative AI systems and services orders totaled $4.6 billion as of mid-fiscal 2024.
“Although HPE continues to expect a low-double-digit year-over-year decline in FY24 earnings, the company expects to increase revenues 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:) got a vote of confidence among Deusche Bank analysts, who reiterated their buy rating on the stock and raised their price target to $650.
They note that Adobe is on track to report second-quarter earnings on June 13, with the stock currently under pressure due to competitive concerns and disappointing near-term artificial intelligence (genAI) monetization.
“We expect some outperformance from DM NNARR (developed markets net annual recurring revenue), with F2Q estimates currently sub-seasonal, although we are less convinced about the magnitude of the upside given pricing noise and lack of credit monetization generated,” the bank's analysts said.
“We expect investors to focus on commentary on ex-pricing NNARR growth to get a sense of underlying momentum given continued headwinds to year-over-year net pricing in Q2,” they added.
Deutsche also noted early positive momentum in Express for Enterprise and strong early growth in monthly active users (MAUs) for the recently released Express mobile app with Firefly, which supports the expansion of Adobe's pioneering efforts.
However, the Bank does not expect significant contributions from generative credit packages until more consumption-intensive generative models, such as 3D, video, and animation, become widely available.
Bank of America: The semiconductor industry is poised for several years of growth as the artificial intelligence boom continues
Bank of America expects a multi-year boom in the semiconductor industry, fueled by growing demand for artificial intelligence. Bank of America analysts noted that observations from Computex, a technology trade event, indicated a global trend towards artificial intelligence in various sectors.
“We see the semiconductor industry as poised for growth for several years, with technology giants participating in AI at Computex,” they said.
The bank noted the growing presence of artificial intelligence in data centers, edge computing, computers, and smartphones, necessitating larger semiconductor dies to handle increased 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.
Furthermore, Bank of America also highlighted ARM's expectations for a major boom in AI-ready devices, predicting that there will be more than 100 billion AI-capable ARM units by the end of 2025.
