One of the major analyst moves in the AI sector this week came from Evercore ISI, recommending a buy on Nvidia (NASDAQ:NVDA) stock ahead of its upcoming earnings report. The investment bank believes that recent concerns about potential delays in the release of the Blackwell system are unwarranted. They point to the strong demand for Nvidia’s systems, with a 20% increase in hyperscale capital expenditure (CapEx) during Q2 2024. Evercore anticipates further growth in CapEx in Q3 and Q4. Despite fears of delays in the Blackwell system, Evercore remains bullish on Nvidia’s ability to quickly pivot and provide alternative solutions. They believe that even if Blackwell faces delays, demand for current generation solutions will remain robust, particularly among Tier 2 and 3 CSPs and enterprises. Evercore continues to view Nvidia as a top pick in computing, forecasting significant growth in earnings per share (EPS) by 2030 and potential inclusion in the S&P 500 Index.
On the Apple (NASDAQ:AAPL) front, MoffettNathanson initiated coverage with a Neutral rating and a price target of $211 per share. While acknowledging Apple’s strong AI strategy, the firm believes that the market has already priced in the potential upside. Despite concerns about Apple lagging in AI, MoffettNathanson notes that the company has demonstrated its commitment to AI, particularly evident after the World Wide Developers Conference. However, the firm believes that Apple’s AI capabilities are already factored into the stock price. They highlighted Apple’s approach to leveraging user trust and personal data for AI applications, emphasizing the potential for an iPhone upgrade cycle. Despite the positive aspects of Apple’s AI strategy, MoffettNathanson remains cautious about the stock’s valuation and expects it to remain flat in the near term.
Edward Jones initiated coverage of Advanced Micro Devices (NASDAQ:AMD) with a Buy rating, adding the semiconductor giant to its Focus List. The firm cites multiple catalysts that could drive significant growth for AMD, including the rising demand for data center infrastructure. Edward Jones sees AMD benefiting from increased GPU and CPU sales driven by data center expansion. The acquisition of Xilinx further adds to AMD’s growth potential, with opportunities for cross-selling and integration of new programmable chip products. The analysts believe that AMD’s positive outlook is not fully reflected in the current share price, presenting an attractive investment opportunity. They also foresee a prolonged upgrade cycle in the PC market fueled by AI-enabled PCs, further supporting AMD’s growth prospects.
In contrast, Bank of America issued a double downgrade on Silicon Motion Technology (NASDAQ:SIMO) following expectations of limited growth in the second half of 2024. The analysts downgraded SIMO from Buy to Underperform, citing low exposure to AI and enterprise SSD, areas dominated by other key players. BofA reduced its EPS estimates for SIMO and lowered the price target, reflecting a bearish outlook on limited growth potential beyond 2024. Additionally, the analysts noted weakening demand for commodity memory, further impacting SIMO’s revenue. Overall, BofA is cautious about SIMO’s future performance and downgraded the stock accordingly.
Lastly, Bernstein downgraded Baidu (NASDAQ:BIDU) from Outperform to Market Perform, citing increased disruption and reduced clarity on future prospects. The analysts anticipate Baidu’s stock trading sideways due to uncertainties surrounding the company’s Search growth expectations. While acknowledging the positive developments in AI Cloud and Robotaxi, Bernstein remains bearish on the stock’s near-term outlook, particularly in the Search segment. The firm lowered its Search growth expectations for the second half of 2024 and 2025, valuing the stock on a more cautious approach without factoring in potential gains from AI Search initiatives. Bernstein’s downgrade reflects concerns about Baidu’s ability to navigate disruptions and deliver on growth expectations.
The analyst moves in the AI sector this week offer a diverse range of perspectives on key players like Nvidia, Apple, AMD, Silicon Motion Technology, and Baidu. While bullish outlooks on Nvidia and AMD highlight growth opportunities driven by strong demand and strategic acquisitions, cautious views on Apple, SIMO, and Baidu underscore concerns about the impact of market pricing, limited growth potential, and increased disruptions. Investors should carefully consider these analyst recommendations and conduct thorough research before making investment decisions in the dynamic AI sector.