ASML Achieves New Street High Price Target, HPE Upgrades By Investing.com
Investing.com — Here are the biggest analyst moves in artificial intelligence (AI) this week.
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Evercore: Nvidia stock split could be a catalyst for volatility.
Nvidia (NASDAQ:) shares will begin trading on a split-adjusted basis on Monday, and the 10-for-1 split could serve as a potential catalyst for increased market volatility, according to Evercore analysts.
Following Nvidia’s earnings report on May 22, which included the announcement of a stock split effective June 10, Nvidia’s stock price soared 20.9% in four sessions, while the S&P 500 index fell 0.75%. The Evercore team said the performance difference between the two products was “unprecedented.”
The investment firm noted that similar past events have resulted in notable momentum changes and increased volatility. One such “extreme” episode occurred on August 31, 2020, amidst the Apple (NASDAQ:) and Tesla stock splits. There was an equally strong Nasdaq 100-led market rally at the time. Analysts said the change in momentum around the effective date of the split was significant.
“The results at the end of 2020 were increased bearishness, increased market volatility, and a leadership shift from NDX/Growth to Small Cap stocks,” they wrote.
Now that Nvidia’s June 10 spinoff is likely to “shift the narrative,” along with other catalysts such as new jobs reports, CPI and FOMC data, and the Trump ruling, Evercore advised investors to brace for higher volatility.
Bank of America raises ASML stock price target to all-time high
Bank of America analysts on Thursday raised their price target for ASML (NASDAQ:) to a Wall Street high of 1,302 euros, saying they are growing confident the European semiconductor giant can achieve sales of 40 billion euros by 2025.
ASML, which is also BofA’s top pick, has been described as a “key enabler” in building AI infrastructure.
BofA increased its 2025 and 2026 revenue and EPS estimates for ASML by about 6% to 9%, reflecting “growing demand for EUV tools and higher confidence in GM growth.”
“Our new CY25/26E revenue estimates are 10-7% higher than CSS, while our EPS estimates are 15-9% higher than CSS,” BofA analysts wrote.
“ASML remains the top choice for EU Semicaps,” he added.
BofA acknowledged concerns about foundry orders through the end of the year, but believes investments by major hyperscalers and enterprise customers in AI infrastructure are a clear signal that significant capacity additions are needed at the leading edge.
Argus has upgraded HPE to a purchase to capitalize on growing opportunities in the AI space.
Analysts at Argus Research upgraded their rating on shares of HP (NYSE:) Enterprise from Hold to Buy and set a price target of $26.
The investment firm cited the company’s strong positioning and growing opportunities in the AI space as key factors in the upgrade.
Hewlett Packard Enterprise (NYSE:), a provider of edge-to-cloud solutions, beat consensus revenue and non-GAAP earnings per share (EPS) estimates for the first quarter of fiscal 2024 and provided positive forward guidance.
Argus analysts said HPE continues to generate strong revenue from AI servers and its overall computing business is now showing signs of recovery. As of mid-fiscal year 2024, cumulative orders for AI systems and services totaled $4.6 billion.
“While HPE continues to expect a low double-digit year-over-year decline in FY24 revenue, the company expects to grow its revenue and, in our view, is positioned to accelerate revenue and earnings growth,” he wrote.
Deutsche Bank raised its Adobe price target despite weak GenAI revenue generation.
Also this week, design software maker Adobe (NASDAQ:) received a vote of confidence among Deustche Bank analysts, who reiterated a Buy rating on the stock and raised their price target to $650.
They note that Adobe is scheduled to report second-quarter earnings on June 13, and that its stock price is currently under pressure from competitive concerns and overwhelming near-term generative AI (genAI) revenue generation.
“We expect our F2Q estimates to outperform some DM NNARRs (Developed Markets Net Annual Recurring Returns) given that they are currently unseasonal,” the bank analyst said. “However, the upside is limited due to price volatility and lack of generative credit monetization.” There is less confidence about the size,” the banking analyst said.
“We expect investors to focus on commentary on the pricing of NNARR growth to determine underlying momentum, given that year-over-year net price headwinds remain in F2Q,” he added.
Deutsche also pointed to the early positive momentum of Express for Enterprise and strong early growth in monthly active users (MAU) of the recently launched Express mobile apps, including Firefly, which supports the expansion of Adobe’s top-of-funnel efforts.
Nonetheless, banks do not expect generative credit packs to make a significant contribution until high-consumption generative models such as 3D, video and animation become widespread.
BofA: Semiconductor industry set for multi-year growth as AI boom continues
Bank of America predicts a multi-year boom for the semiconductor industry due to surging demand for AI. BofA analysts noted that observations from technology trade event Computex point to a global push toward AI across a variety of sectors.
“We anticipate multi-year growth in the semiconductor industry, and big tech companies are going all-in on AI at Computex,” they said.
The bank noted that the growing presence of AI in data centers, edge computing, PCs and smartphones will require larger semiconductor dies to handle increasing 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.
BofA also highlighted ARM’s outlook for rapid growth in AI-enabled devices, predicting there will be more than 100 billion ARM devices capable of running AI by the end of 2025.
