Investing.com — Here are analysts’ biggest moves in artificial intelligence (AI) this week.
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Nvidia stocks up on new Top Pick Mizuho for November
Mizuho has named Nvidia (NASDAQ:) as its top pick for November, highlighting the company’s strong leadership in the AI and data center market.
The company reiterated an Outperform rating and set a price target of $140, highlighting Nvidia’s dominance in AI training and inference chips for data centers, where it reportedly holds more than 95% of the market share.
Mizuho expects substantial growth in the data center AI chip market, with a compound annual growth rate of 74%, potentially pushing the market size past $400 billion by 2027. This expansion is expected to be driven by Nvidia’s advanced product lineup and roadmap, including the H200, GB200 and GB300 chips scheduled for rollout in 2024 and 2025.
Additionally, Nvidia’s Grace CPU and NVL36/72 servers are seen as catalysts for content growth within AI servers.
In addition to the strength of its data centers, Nvidia continues to excel in the gaming market, where it has an estimated 75% market share in PC gaming GPUs. Mizuho sees growth potential here, noting: “We believe the headwind from restrictions on AI chips in China remains limited.”
The company also hints at an opportunity for an upgrade cycle with the upcoming RTX 50 series, as the RTX 40 series’ penetration is around 10% of the PC market, which could position Nvidia to achieve gaming revenue of to reach more than $10 billion. annual.
Mizuho also underlines Nvidia’s competitive advantage over rivals AMD (NASDAQ:) and Intel (NASDAQ:). While AMD’s MI300 and Intel’s Gaudi3 chips are making progress, Mizuho expects Nvidia to maintain its lead thanks to the performance improvements offered by the Blackwell architecture, which also enables more efficient pricing and higher average selling prices.
Trump wins bullishly for Big Tech: Wedbush
Wedbush analysts expect a robust bullish reaction from tech stocks to Donald Trump’s victory in the US presidential election, especially in the event of a potential red sweep by Congress.
According to the investment bank, a Trump administration is likely to spotlight AI initiatives in the US, which will benefit leading tech giants such as Microsoft (NASDAQ:), Amazon (NASDAQ:) and Google (NASDAQ:).
Wedbush notes that these initiatives, especially within government agencies like the Department of Defense, could provide a strong boost to AI-focused companies like Palantir.
While major changes to the Inflation Reduction Act (IRA) could have an adverse impact on companies like Intel, Wedbush analysts, led by Dan Ives, believe AI “will come first in our view and benefit Big Tech.”
Another possible benefit for tech companies under Trump would be Lina Khan’s departure from the Federal Trade Commission (FTC).
Khan has been a formidable opponent for the tech sector, challenging deals and scrutinizing major players. Analysts emphasize that her potential departure would be “a huge positive for Big Tech” as it could open doors for more deal activity across the sector.
Additionally, Elon Musk, a prominent Trump supporter, could influence Khan’s departure, potentially hastening a shift that benefits tech companies. While antitrust concerns still exist, especially with the Justice Department’s actions against Google and Apple (NASDAQ:), a change at the FTC would likely remove one of the biggest hurdles for Big Tech.
Wedbush analysts also argue that Tesla (NASDAQ:) and Musk stand to benefit the most from a Trump victory. While the broader electric vehicle (EV) industry could face setbacks if EV rebates and tax breaks are rolled back, Tesla’s unique scale and market position could give the company a clear advantage in an unsubsidized environment.
JPMorgan cuts SMCI to sell
JPMorgan on Wednesday downgraded Super Micro Computer (NASDAQ:) from Neutral to Underweight and set a new price target of $23, down from $50. The bank cited growing uncertainties about both Super Micro’s business fundamentals and its financial reporting practices.
A major driver behind the reduction is a lack of transparency. JPMorgan analysts pointed out that “the company refrained from providing further transparency around the issues that led to disagreements with the prior auditor (E&Y), even as it affirmed the Special Committee’s view that the Audit Committee had acted independently and that there was no evidence of fraud. or misconduct.”
Further concerns arise from the company’s management, particularly about the lack of commitment to leadership changes. The delay in appointing a new auditor is seen as a setback, potentially further exacerbating non-compliance with SEC filings.
On the business front, JPMorgan is seeing a slowdown in demand for Super Micro’s current Hopper-based servers as customers anticipate the next generation of Blackwell-based products. This shift in demand could put pressure on Super Micro to lower prices, which could compress margins in an already competitive market.
The analysts also pointed to Super Micro’s “$5 billion of inventory on the balance sheet,” suggesting this inventory level could increase price risk if demand continues to decline.
They raised additional concerns about Super Micro’s ability to maintain gross margins within the targeted range of 14-17%.
Delays in next-generation GPU products could hinder the company’s competitive position in AI servers, putting it at risk of losing market share, especially within the enterprise segment, to other server providers.
Broadcom could grow AI revenue at a CAGR of 35%, BofA says
Bank of America analysts see strong growth potential for Broadcom (NASDAQ:) in AI-related revenues, with a forecast compound annual growth rate (CAGR) of 30-35% in the coming years.
BofA reaffirmed a buy rating on the stock, highlighting Broadcom’s strengths in AI computing and networking, along with solid free cash flow generation.
The bank has lowered its FY 2025 earnings forecast for Broadcom due to “seasonal headwinds”, mainly due to a product transition involving Google’s Tensor Processing Unit (TPU), which is expected to be the main focus in the first half of the year will affect revenues.
Nevertheless, BofA expects this dip to be offset by new AI and networking contracts, along with expanded content capabilities at Apple. These factors are expected to push Broadcom’s earnings per share (EPS) to an adjusted $7.31 by 2026.
Broadcom’s recent decision to return to quarterly guidance could draw more attention to seasonal fluctuations and “lumpy AI shipments,” but BofA analysts remain bullish on the company’s long-term AI prospects.
They estimate that AI-focused networking and custom chip sales could increase AI-related revenues from about 23-24% of Broadcom’s current revenue to more than 30% by fiscal year 2026.
BofA also pointed to Broadcom’s strategic positioning in AI, noting that partnerships with customers like OpenAI could drive growth beyond 2026.
As AI adoption accelerates, BofA sees Broadcom’s focus on high-performance AI networking solutions – especially those that complement NVIDIA’s upcoming Blackwell architecture – as key to strengthening its role in the industry.
Argus downgrades Palantir due to valuation concerns
Earlier this week, Argus analysts downgraded the rating Palantir Technologies Inc (NYSE:) from Buy to Hold, highlighting concerns that the stock’s recent rally could outperform the company’s fundamentals.
While Palantir posted a strong third quarter with accelerating revenue growth and expanding margins – driven by renewed momentum in its core US government business and continued growth in the US commercial market – the Argus team noted that stocks, which have almost tripled in value in years, may now be overvalued.
Palantir’s business model focuses on serving a niche segment of customers with highly complex IT needs, which can result in uneven financial results.
Analysts warned that such volatility could lead to sharp market reactions, especially for highly valued technology stocks like Palantir. Traditionally serving the U.S. defense and intelligence sectors, Palantir has expanded its offerings into the commercial sector, where its data management and analytics platforms address complex business challenges. In 2023, government contracts still made up 55% of the company’s revenue.
“While we expect this segment to continue to grow, the commercial sector, especially in the US, appears to be the future growth driver,” analysts said.
Like other enterprise software companies, Palantir is increasingly reliant on AI-powered applications to drive growth. Despite the rating downgrade, Bonner maintained a positive view of the company’s long-term potential.
