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Investing.com — This week has seen several significant analyst adjustments in the realm of artificial intelligence (AI) and technology stocks. Here are the key movements that investors should note.
2025 Could Mark the Apex for Nvidia Stock: D.A. Davidson
In a recent analysis, D.A. Davidson posited that 2025 might be the pinnacle year for Nvidia (NASDAQ:) stock, while expressing a reserved outlook toward the company’s extended growth trajectory.
Despite Nvidia’s impressive performance last year, analysts have raised doubts regarding its capability to fulfill the expectations set for 2026, characterizing these projections as notably low. The firm commenced its coverage of Nvidia in January 2024 with a Neutral rating, highlighting concerns that have led it to be one of the most conservative assessments on Nvidia’s future.
Maintaining the Neutral rating, D.A. Davidson established a price target of $135, reflecting a multiple of 35 times earnings. As the analysts conveyed, “While we observe a potential high in 2025, we foresee challenges in sustaining growth beyond this point.”
Key apprehensions cited by the firm include supply chain disruptions, such as restrictions affecting sales to China and complications tied to Nvidia’s Blackwell product line. Interestingly, D.A. Davidson remarked that these supply chain issues could inadvertently extend the current market cycle as constraints may support ongoing demand in the immediate future. Nonetheless, a slowdown is anticipated in 2026.
Analysts from the firm stated, “In the short run, we expect attention to concentrate on supply chain disruptions, particularly sales limits to China and Blackwell quality concerns, while demand will be the primary long-term driver.”
Morgan Stanley Raises Tesla Bull Case to $800
This week, Morgan Stanley (NYSE:) increased its price target for Tesla Inc (NASDAQ:) shares from $400 to $430, while introducing an optimistic bull case valuation of $800.
The firm’s analysts credited Tesla’s advancements in autonomous vehicle (AV) technology and its integration of embodied AI as pivotal factors influencing future growth prospects.
Highlighting Tesla’s unique strengths in data acquisition, robotics, energy storage, and AI infrastructure, the report positions the company firmly as a frontrunner in the autonomous mobility sector.
Within the updated sum-of-the-parts (SOTP) analysis, Tesla Mobility, which encompasses the company’s autonomous rideshare business, is valued at $90 per share. This division is projected to scale its fleet to 7.5 million vehicles by 2040, with anticipated revenue of $1.46 per mile and an EBITDA margin of 29%.
Further emphasizing Tesla’s growth, the report identifies the rising significance of Network Services, which comprise ongoing revenue from offerings like Full Self-Driving (FSD), supercharging, and software updates. By 2030, these services are expected to represent a third of Tesla’s total EBITDA, surging to nearly 60% by 2040, with a current per-share valuation of $168.
As articulated by analysts led by Adam Jonas, “We have raised our target price to $430, driven by higher valuations for our Mobility and Network Services estimates, albeit partially offset by a decreased value in our 3rd Party Battery operations.”
The study also suggests that Tesla’s promise in embodied AI might expand beyond the automotive industry into sectors like aviation and marine applications, although these areas are not yet factored into the current valuation. Analysts believe the launch of Tesla’s unsupervised autonomous vehicle fleet in urban settings could occur by 2026, but widespread deployment might not take place until post-2030.
While the forthcoming governmental administration may reassess national self-driving regulations, significant challenges remain regarding technology, testing, and licensing for short-term commercialization, the analysts added.
In the bullish scenario, analysts predict a fleet of 12 million vehicles by 2040, generating revenues of $1.50 per mile with a 45% EBITDA margin, driven largely by international growth and improved pricing strategies. Conversely, a bear case estimation values shares at $200, reflecting anticipated obstacles such as tighter regulations and slower market acceptance.
AMD Downgraded by Wolfe Research
Wolfe Research has revised its rating on Advanced Micro Devices Inc (NASDAQ:) to Peer Perform from Outperform, primarily due to lowered expectations for the company’s data center GPU revenues in 2025.
Analysts now project revenue of $7 billion for this segment, a noticeable decrease from the previous forecast of over $10 billion.
The firm noted, “We now expect $7 billion in DC GPU revenue for CY25, significantly lowered from our earlier estimate of $10 billion or more.” They also anticipate that AMD will not provide guidance for this segment in its imminent fourth-quarter earnings report.
This downgrade follows insights from visits to Asian markets, where indications pointed to minimal growth for AMD. Analysts expect data center GPU revenue to fall within the $1.5-2.0 billion range for the fourth quarter, with projections of $7 billion for calendar year 2025—far below buy-side expectations of around $10 billion.
The outlook remains challenging across other AMD segments as well. A 17% sequential decline is expected in the client segment for the first quarter of 2025, attributed to sluggish PC demand, a 20% drop in gaming revenue, and no immediate recovery in the embedded segment, although some improvement may occur later in the year.
In light of these alterations, Wolfe Research has adjusted its forecasts for AMD’s total revenue and earnings in 2025 to $29.9 billion and $4.19 per share, respectively, down from earlier estimates of $33.6 billion and $5.33 per share. However, Wolfe Research noted a measure of optimism surrounding the upcoming MI350 series, set to launch in the latter half of 2025.
TD Cowen Upgrades SAP Stock to Buy
TD Cowen has announced an upgrade of SAP SE ADR (NYSE:) from Hold to Buy, while increasing its price target from $240 to $305.
This decision is strongly supported by survey results indicating a notable increase in the prioritization of Cloud enterprise resource planning (ERP), with AI emerging as a substantial catalyst for ERP migration.
As analysts led by Derrick Wood stated, “The dual effects of growth acceleration and margin expansion should continue through 2027, exerting upward pressure on valuation.”
The firm’s Software Spending Survey showed a significant rise in ERP expectations, now ranked third in SaaS spending priorities, up four spots from the previous year. Furthermore, quarterly surveys from SAP partners indicated an improved performance outlook for 2025, with expectations rising from a 2% to 7% growth year over year.
TD Cowen emphasized strong demand for Cloud ERP, which exhibited resilience throughout 2024 and is set to accelerate in the next three years. Factors behind this growth include the predicted two- to threefold revenue conversion on cloud migrations, the impending end-of-life for SAP’s legacy ECC product by 2027, and escalating attach rates for adjacent products.
Additonally, SAP is anticipated to experience diminished negative impacts from IaaS and transactional products, as well as an increase in average selling prices (ASP) owing to new AI and data offerings.
TD Cowen highlighted that SAP is positioned to harness AI in two significant ways: as an impetus for accelerating Cloud ERP migrations and through monetizing GenAI features in its Premium SKU, which commands about a 30% price increase.
Looking ahead to the forthcoming Q4 earnings report set for January 28, TD Cowen expects SAP to record another five-year peak in Cloud growth.
Analysts project that Cloud growth may accelerate nearly 200 basis points to roughly 29% at constant currency, surpassing market expectations of around 28%. Additionally, fluctuations in the US dollar are expected to provide favorable conditions, prompting TD Cowen to enhance its fiscal year 2025 predictions.
According to analysts, the combination of strengthening growth and expanding profit margins will likely persist, further driving SAP’s valuation upward.
Oppenheimer Identifies Snowflake as a Top Pick for 2025
Oppenheimer analysts have reiterated their stance on Snowflake Inc (NYSE:), naming the company as their top pick for 2025 and raising its price target from $180 to $200.
This optimistic outlook is based on a variety of factors that could enable Snowflake to outperform its peers. Oppenheimer indicates that the company is poised for a favorable setup in fiscal year 2026, bolstered by initial guidance that aligns with consensus expectations and may yield slight advantages.
Analysts anticipate a consistent pattern of beating projections throughout the year, fueled by new product launches and a surge in AI-driven workloads. Significant developments such as Snowpark, Dynamic Tables, and Cortex are expected to elevate usage rates and accelerate revenue growth.
Additionally, Oppenheimer has shifted its viewpoint concerning Iceberg. Though initial concerns about potential revenue losses in FY25 dimmed expectations, the firm now regards Iceberg as a growth driver for FY26, likely enhancing Snowflake’s consumption rates and revenue generation.
Momentum generated through the Cortex platform and AI applications is viewed as a crucial aspect of future performance as organizations strive to leverage Snowflake’s capabilities for AI workloads amidst the growing trend towards cloud and large language model (LLM) independence.
Finally, the bank foresees a forthcoming expansion in operating margins as investment levels stabilize following a period of increased expenditure in FY25, laying the groundwork for improved profitability.
Oppenheimer concluded, “Net, we see solid support for enhancing consumption with additional upside potential from new offerings, increased AI utilization, and better margins.”
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