Investing.com – Here are analysts’ biggest moves in artificial intelligence (AI) this week.
InvestingPro subscribers always get priority access to market-moving AI analyst commentary. Upgrade today!
Nvidia (NASDAQ:) stock has been downgraded by New Street Research.
Analysts at New Street Research downgraded Nvidia stock to neutral from buy on Friday.
In a note to clients, the research firm said its current forecast is for GPU revenue to grow 35% in 2025, in line with its previous forecast. The analysts said they see “limited potential for further upside based on what we’re hearing from the value chain.”
“We downgrade the stock to Neutral today, as the upside will only come if the market rises, with expectations rising significantly after 2025, and we do not have enough conviction on this scenario yet.”
New Street noted that consensus expects revenue growth to slow to the mid-teens, which could be at risk due to potential massive capex cuts and increased competition from ASICs and AMD (NASDAQ:).
Analysts noted that they saw no further upside for the stock absent a change in outlook. They warned of the risk of a potential credit downgrade, noting that the stock is currently trading at 40 times 12-month earnings per share, compared with a low of 20 times when growth slowed to 10% in 2019, before rising to 35 times.
New Street values Nvidia at 35 times earnings, which is consistent with the multiple we saw in late 2019 and early 2020. With an estimated EPS of $4.1 in 2027, that implies a target price 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 remains intact, and we would become buyers again, but only in the event of prolonged weakness,” the analysts wrote.
UBS Cuts Pure Storage (NYSE:) to “Sell,” “Too Much Credit Given to AI”
UBS saw shares of Pure Storage, a provider of flash data storage solutions, downgraded from neutral to sell earlier this week.
The investment bank highlighted an unfavorable risk-reward profile for the stock, citing slowing growth, declining market share, high valuation, and “significant credit given to AI.”
Analysts expect PSTG growth to slow to about 8% over the next five years, down from 16% over the past five years. They expect the company’s share of the all-flash storage market to stabilize at about 15%. UBS’s revenue forecasts 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 down about 80 basis points to 14.5% in the past 12 months, as competitors like NetApp’s (NASDAQ:) C-Series gain traction with enterprise customers.
Moreover, UBS pointed to the stock’s massive 83% year-to-date gain, compared to UBS’s 15% gain, despite a 1% revenue cut in FY25 and FY26.
Finally, the analysts noted that while AI infrastructure investments have boosted PSTG’s valuation, “AI-related storage spending is likely to be slower than the market expects and more closely related to inference, a slower growth market than the training market.”
Dell is a new top pick at Bank of America
Analysts at Bank of America 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 on Dell shares to $180 from $130, citing a positive outlook for the company in 2025. The bank highlighted factors such as demand for AI servers, and storage demand expected to IBM (NYSE:) Mainframe upgrade, expected PC upgrade demand.
“Dell Technologies (NYSE:) World 2024 took place May 20-23, where Dell introduced the Dell AI Factory and expanded its AI portfolio with the addition of 5 new AI-PCs, all-flash storage, network architecture, and AI services offerings,” according to the Bank of America team.
“We see these new products supporting Dell’s growth in the C25 region,” the company added.
The brokerage firm also mentioned that Dell’s potential inclusion in the S&P 500 index is another catalyst for the stock.
Mizuho: Amazon (NASDAQ:) is approaching an AI tipping point
Amazon is nearing a major inflection point in AI, analysts at Mizuho said in a note this week, citing a recent customer survey with a major channel partner.
The survey highlighted several trends that point to accelerated growth for Amazon Web Services (AWS).
“We are seeing an accelerated sales cycle driven by increased demand for ECB meetings and the gradual exit of data center contracts,” the note said. Companies are finalizing proposals and paying for contracts in advance to exit data centers, accelerating the AWS sales cycle.
While infrastructure spending remains dominant, Mizuho said “cost optimization is being offset by new services such as application monitoring, chatbot deployments, and large migration programs.” This shift signals a move toward higher-value services on AWS.
According to Mizuho, the most exciting development is the progress made in generative AI projects.
“The survey showed that outward-facing models (20% of total) are only 6 months away from commercial deployment,” the note said, indicating a potential increase in inference activity as these models are deployed to a large outward-facing customer base.
Bank of America Raises Rates on European Chip Stocks
Bank of America has raised its price targets on several European chipmakers, driven by continued strength in demand for artificial intelligence.
The bank’s analysts raised their targets for a number of semiconductor equipment and subsystems suppliers, including Nokia (HE:), Nordic Semiconductor (OL:), Technoprop and Comet.
Nokia now set its target at EUR 3.96, up from EUR 3.58, reflecting the “AI option.” Nordic Semiconductor’s target rose to NOK 169 from NOK 161, supported by improved end-user demand and higher estimates. Technoprobe’s target was set at EUR 10.60, up from EUR 9.40, due to its unique exposure to AI. Comet’s target rose to CHF 448 from CHF 409.
However, Bank of America 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 Bank of America’s top pick among large-cap venture capital firms, driven by the increasing lithography density needed for AI chips.
