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Analysts at JPMorgan just reiterated an overweight rating on Apple, noting that the tech giant has the advantage in the personal AI companion space.
“In our view, launch of personalized Siri to enable services to maintain conversational context on the AI Companions will play a major role in determining the likelihood of success for Apple in relation to planned AI Companions, including integration with applications relative to its multimodal inputs across voice, text, and images,” said the firm, as quoted by CNBC.
JPMorgan also reiterated an overweight rating on Salesforce, with a price target of $320.
“Salesforce stands out from almost any pack as the pioneering trailblazer of the cloud computing movement, and it has become a true multi-product success story as it now rides atop multiple product pillars of substantial scale and trajectory,” said the firm.
Analysts at Oppenheimer reiterated an outperform rating on Broadcom, saying it’s bullish ahead of earnings next week. “We see upside to Street’s F1Q (Jan) sales/ EPS $19.2B/$2.02 and F2Q (Apr) $20.4B/$2.15 estimates, led by AI. AI-related sales accelerating.”
At the moment, the S&P 500 is up fractionally. The SPDR S&P 500 ETF (SPY) is up about 0.12%. The Dow is up 0.21%, or by 103 points. The Nasdaq is up 0.04%, or by 14 points. Gold is down about $34 to $5,173. Meanwhile, Bitcoin is up about $152 at $68,111.80.
We were hoping to see far more explosive numbers – especially with Nvidia’s (NASDAQ: NVDA | NVDA Price Prediction) better-than-expected numbers. Revenue hit $68.13 billion, which was well ahead of expectations of $66.21 billion. EPS of $1.62 beat by eight cents. It also saw record quarterly data center revenue of $62.3 billion, up 75% year over year. Nvidia even declared a one-cent per share dividend, which is payable on April 1 to shareholders of record as of March 11.
Moving forward, the company said it expects to see revenue of $78 billion, plus/minus 2%, which is also well above estimates of $72.8 billion.
Yet, the market reaction wasn’t as great as expected.
As noted by Seeking Alpha, “Morgan Stanley analyst Joseph Moore… was ‘surprised’ by the muted reaction to the stock, given that the results were the ‘largest, cleanest beat and raise in the history of the semis industry.’”
Unfortunately, AI capex spending concerns are weighing the stock down
One of the reasons we’re not seeing a greater response is that markets are still concerned about high levels of AI capex spending, which, according to JPMorgan, is based on broken logic.
On one side of the argument, there’s fear that AI will disrupt the entire software industry. Second, there are concerns that hyperscalers are spending too much on AI capex, and that such big investments won’t pay off moving forward. But both can’t be true, say the analysts.
“If AI companies are going to disrupt, destroy, and replace all software companies, those AI stocks should be more valuable. Or if AI is overvalued and those big capital expenditures are never going to pay off, software stock investors should be less worried about their companies getting wrecked by AI,” as quoted by Yahoo Finance.
In addition, according to Dan Hanbury, global strategic equity co-portfolio manager at Ninety-One, as quoted by CNBC, “What is weighing heavily on investors’ minds is how Nvidia can maintain its phenomenal growth rate now its core customers — the hyperscalers — are mostly depleting their cash flows, spending on AI-related capex.”
Nvidia is Still a Top Pick
According to analysts at Bank of America, NVDA is still a top pick. The firm also reiterated its buy on the tech giant with a price target of $300.
“Our positive view on Nvidia is based on its underappreciated transformation from a traditional PC graphics chip vendor, into a supplier into high-end gaming, enterprise graphics, cloud, accelerated computing, and automotive markets,” they added.
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