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Analysts Respond to Nvidia’s Growth
On the other hand, The Economist has raised some doubts about the spread of AI. In a July 2 article, the magazine said that incorporating “AI into business processes remains a distinct goal.”
“Even bullish analysts think Microsoft will only make about $10 billion in AI-related generative sales this year,” the publication reported. “Beyond America’s West Coast, there are few signs that AI is affecting much of anything.”
Related: Analysts reset Nvidia stock forecasts after stock falls
The Economist pointed to the US Census Bureau’s Business Trends and Outlook Survey, which found that firms’ overall use of AI tools in the production of goods and services rose to 5.4% in February from 3.7% last fall and is expected to rise in the US to 6.6% in early fall.
The use of AI by companies is still quite small because many businesses have not yet seen the need for it, the Census Bureau researchers said.
“Many small businesses, such as barbershops, nail salons or dry cleaners, may not yet see a use for AI, but that may change with growing business applications of AI,” they said. “One possible explanation is the current lack of AI applications for a wide variety of business problems.”
Regardless of how you feel about the future of artificial intelligence, we can probably all agree that Nvidia (NVDA) is the biggest name in the AI game right now.
Not long ago the chipmaker briefly surpassed Microsoft (MSFT) as the most valuable company in the world, and in general, analysts have responded positively to Nvidia’s success.
Morgan Stanley analyst Joseph Moore raised his price target on Nvidia by $28 to $144 per share, while maintaining an overweight rating. Checks by his team after visits to China and Taiwan suggest sales of the two main products “will remain strong”.
“The catalyst path remains strong as very strong growth in H20 builds and demand removes any concern for us of a pre-Blackwell pause,” Moore and his team wrote.
Nvidia launched its Blackwell lineup of AI-powered processors this spring.
Nvidia reverse: Firm has ‘cautious view’
“Hopper builds continue to grow as the H100 begins to transition to the H200 (bringing better memory bandwidth from HBM3e as well as higher memory content),” they added, referring to the GPU microarchitecture of developed by Nvidia.
Truist raised its price target on Nvidia to $140 from $128 on June 27 and affirmed a buy rating on the stock. Becoming the largest company by market capitalization does not appear to systematically challenge future investment returns for stocks, the investment firm said.
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Truist said feedback from industry contacts indicates demand for Blackwell is expanding.
And last month, Wedbush analyst Dan Ives said that “over the next year, the race to the $4 trillion market [capitalization] in technology will be front and center between Nvidia, Apple and Microsoft.”
And now, the opposite: Analysts at New Street Research downgraded Nvidia to neutral from buy with a one-year price target of $135.
The firm said the shares are “being fully priced for the base case”.
Although Nvidia remains the strongest franchise for AI data centers, analysts told New Street, “short-term expectations and valuation justify a more cautious view of the stock.”
The stock’s reversal will only materialize in a bullish case, in which the outlook beyond 2025 materially increases and New Street is not yet convinced of this scenario.
New Street said “the quality of the franchise is nevertheless intact” and would again be a buyer of Nvidia, “but only on prolonged weakness”.
Among AI stocks, New Street looks at AMD (AMD) and Taiwan Semiconductor (TSM) as more attractive, the firm said.
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