Goldman: AI Market Shows Strong Growth with 5 Major Analyst Moves, Not Yet a Bubble

Goldman: AI Market Shows Strong Growth with 5 Major Analyst Moves, Not Yet a Bubble — Here are the biggest analyst moves in artificial intelligence (AI) this week.

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Wedbush raises Nvidia PT to $1,000 before GTC

Matt Bryson, equity analyst at Wedbush, increased the target price of Nvidia (NASDAQ:) stock from $850 to $1,000 ahead of the company’s Global Artificial Intelligence Conference (GTC) next week.

He believes the flow of information could serve as a positive near-term catalyst for NVDA “in addition to continued information suggesting that end demand for NVDA’s AI products remains robust.”

This outlook is supported by recent comments from Oracle (NYSE:), which highlight not only healthy demand for cloud services, but also its anticipated capital spending plans for the current quarter and fiscal 2025, said the analyst.

As for the conference itself, Bryson is expecting information on several developments, including Nvidia’s new Blackwell architecture.

“We expect NVDA’s new Blackwell architecture to provide significant performance gains over Hopper. As a reminder, NVDA touted the H100 as delivering up to 9x faster training and 30x faster inference performance than the A100,” he wrote.

Goldman Sachs: AI is not yet in a bubble

The relentless rally of NVDA and other pioneers of the current AI boom has sparked speculation among market participants about whether the market is in a bubble.

During the week, analysts from Goldman Sachs published a note on this subject, in which they point out that although optimism around AI is increasing in the US stock market, it has not yet reached the heights of the tech bubble or the immediate post-COVID-19 era. 19 period.

Analysts pointed out that their revised estimate for the long-term growth rate now stands at 11%, up from the usual 9%, but still lower than the 16% seen during the tech bubble and the 13% at the end of 2021 .

For the top ten technology, media and telecommunications (TMT) stocks, expected third-year earnings growth is 15%, slightly above the median of 11%, but not as high as March’s 24% 2000 or 18% in March 2000. October 2021.

“Third, the valuation of the 10 largest TMT stocks equals 28x, which pales in comparison to the peak of the tech bubble (52x) and the end of 2021 (43x),” they added.

Citi reveals investors’ favorite and least favorite AI stocks

Earlier in the week, Citi Research analysts said they had spent the past few weeks meeting with investors, who revealed their most and least favorite stocks in the AI ​​sector.

Among the most favored were Nvidia, AMD (NASDAQ:) and Broadcom (NASDAQ:), as well as companies in the equipment sector and NXP Semiconductors (NASDAQ:).

Conversely, the most hated stocks were identified as Micron Technology (NASDAQ:), as well as ABOUT Semiconductor (NASDAQ:) and Microchip Technology (NASDAQ:).

“Many questions have also been raised about whether AI is a bubble and how long semi-stocks can maintain these valuations,” Citi analysts noted.

“We think this is one of the rare times it’s different and 2024 is shaping up to be a repeat of 1999. We came away with more conviction on our top pick Micron and more concern on analog stocks like ADI/MCHP.”

At the same time, Citi also responded to investor concerns about a potential AI bubble, saying it is likely a bubble but “could last until 2025.”

“We note that these bubbles can last a year or more, similar to what happened in 1999 with the tech bubble,” they said.

BofA Raises Super Micro PT Amid Growth in AI Server Sector

Bank of America analysts raised their price target for AI darling Super Micro from $1,040 to $1,280, citing higher expectations for growth in the AI ​​server sector.

“We now expect industry revenues to increase from around $39 billion to around $200 billion between 2023 and 2027,” the analysts said in a note published Wednesday.

The BofA team noted that SMCI’s competitive strengths lie in its modular architecture, which facilitates the rapid integration of new technologies, thereby reducing time to market.

They further highlighted SMCI’s partnerships with leading AI CPU/GPU/ASIC manufacturers such as Intel (NASDAQ:), Nvidia and AMD.

Additionally, the AI ​​server maker’s ability to tailor configurations to the precise needs of customer applications, as well as its liquid cooling solutions, were also identified as key advantages.

Citi launches PureStorage at Buy

Analysts at Citi Research initiated coverage on Pure Storage (NYSE:) with a Buy rating and a target price of $65.

The Wall Street giant sees the company as one of the “primary beneficiaries of the AI-driven transition to flash storage.”

This upward revision comes despite concerns over Meta’s transition from using PSTG’s external storage hardware to an in-house designed hardware strategy.

“We believe shares have been hurt recently by a tech blog suggesting Meta (NASDAQ:) is moving away from external solutions (like Pure’s) that were incorporated into earlier research groups,” said a Citi analyst .

Still, Pure Storage’s competitive pricing – compared to SSD and HDD options – and its recent wins in AI-related projects put it in a favorable position.

As a company that specializes solely in all-flash technology, PureStorage is in the fastest growing segment of the external storage market, analysts noted.

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