Investing.com – Here are the analysts’ biggest artificial intelligence (AI) moves this week.
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Evercore: Nvidia stock split could be catalyst for volatility
Nvidia (NASDAQ:) shares will begin trading on a split-adjusted basis on Monday, and Evercore analysts say the 10-for-1 split could serve as a potential catalyst for increased market volatility.
Following Nvidia’s May 22 earnings report, 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 such a performance discrepancy between the pair is “unprecedented.”
The investment firm noted that similar past events have also led to noticeable changes in momentum and increased volatility. One such “extreme” episode occurred on August 31, 2020, amid the Apple (NASDAQ:) and Tesla stock splits, which saw an equally strong market rally led by the Nasdaq 100. Analysts said the changes in momentum around the split’s effective dates were significant.
“The result at the end of 2020 was increased headwinds, market volatility, and leadership rotation away from NDX/Growth and toward small-cap stocks,” they wrote.
Now, given the likelihood that Nvidia’s June 10 split will “change the narrative” along with other catalysts such as the jobs report, CPI and FOMC data, and the Trump verdict, Evercore has advised investors to brace for higher volatility.
Bank of America raises ASML stock price target to Street high
Analysts at Bank of America on Thursday raised their price target on ASML (NASDAQ:) to a new Wall Street high of 1,302 euros, saying they are increasingly confident the European semiconductor giant can reach 40 billion euros in revenue by 2025.
ASML, which is also a top pick on BofA, has been described as a “critical tool” for building artificial intelligence infrastructure.
BofA increased its earnings and earnings per share forecast for ASML for calendar years 2025 and 2026 by approximately 6% to 9%, reflecting “higher confidence in higher demand for EUV tools as well as higher GM levels.”
“Our new CY25/26E revenue estimates are 10-7% above css, while our EPS estimates are 15-9% above css,” BofA analysts wrote.
“ASML remains our favorite in EU Semicaps,” they added.
BofA acknowledged concerns about production orders at the end of the year, but believes investment in AI infrastructure by leading hyperscalers and enterprise customers signals a clear need for a significant increase in capacity at the cutting edge.
Argus Upgrades HPE to Buy on Growing Artificial Intelligence Opportunities
Analysts at Argus Research upgraded shares of HP (NYSE:) Enterprise from Hold to Buy with a $26 price target.
The investment firm cited the company’s strengths and growing capabilities in artificial intelligence as key drivers for 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 offered a positive outlook for the future.
Argus analysts said HPE continues to generate strong revenue from its AI servers and its overall computing business is now showing signs of recovery. As of mid-FY 2024, total orders for AI systems and services totaled $4.6 billion.
“While HPE still expects a small double-digit decline in earnings in FY24, the company expects revenue growth and, in our view, is well positioned for sales and earnings growth going forward,” they wrote.
Deutsche Bank raises price target on Adobe despite GenAI’s poor monetization
Also this week, design software maker Adobe (NASDAQ:) received a vote of confidence from Deustche Bank analysts, who reiterated a Buy rating on the stock and raised their price target to $650.
They note that Adobe plans to report second-quarter earnings on June 13, with shares currently under pressure due to competition concerns and poor near-term monetization of generative artificial intelligence (genAI).
“We expect some DM NNARR [Developed Markets Net New Annual Recurring Revenue] leading indicators, with second-quarter estimates currently sub-seasonal, although they are less confident about the magnitude of upside potential given pricing noise and the lack of monetization of generative credit,” bank analysts said.
“We expect investors to closely monitor commentary on NNARR’s ex-price growth for insight into underlying dynamics, given year-on-year headwinds to net prices persist in the second quarter,” they added.
Deutsche also noted early positive momentum in Express for Enterprise and strong early growth in monthly active users (MAU) for the recently released Express mobile app with Firefly, which supports Adobe’s expanding top-of-funnel efforts.
Despite this, the bank does not expect significant contributions from generative loan packages until more resource-intensive generative models such as 3-D, video and animation become widely available.
BofA: Semiconductor industry expects multi-year growth as artificial intelligence boom continues
Bank of America predicts a multi-year boom in the semiconductor industry, driven by growing demand for AI. BofA analysts noted that observations from Computex, a technology trade event, point to a global push towards the use of AI in various sectors.
“We see the semiconductor industry set for multi-year growth, with tech giants going all-in on artificial intelligence at Computex,” they said.
The bank noted the growing presence of artificial intelligence in data centers, edge computing, PCs and smartphones, which requires larger semiconductor chips to handle growing 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.
Moreover, BofA also highlighted ARM’s predictions of significant growth in AI-enabled devices, expecting more than 100 billion AI-capable ARM devices to be built by the end of 2025.