“Buy Nvidia’s Pullback,” Named Apple Top AI Pick by Investing.com

Investing.com — Here are the biggest artificial intelligence (AI) analyst moves for the week.

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Buy the Nvidia stock pullback – UBS, BofA

Wall Street analysts are urging investors to take advantage of the recent pullback in Nvidia (NASDAQ: ) stock. Although the AI ​​giant’s quarterly forecasts fell short of lofty expectations set by investors, which sent its stock soaring on hopes for generative AI, analysts remain optimistic.

Shares of Nvidia fell more than 6% on Thursday after the release of its fiscal second quarter report. While the company reported significant growth and profit, the results were seen as mixed as revenue and gross margin forecasts fell short of Wall Street’s lofty targets as they had in previous quarters.

However, UBS analysts believe investors should “buy the pullback”, noting that key indicators for Nvidia remain bullish. The bank specifically pointed to the increase in Nvidia’s purchase commitments and supply obligations, describing it as “the most important metric we track and a harbinger of future growth.”

UBS analysts also expressed confidence in Nvidia’s margins, saying they are not concerned about gross margins and expect data center margins to remain consistent throughout the Blackwell cycle, mirroring the stability seen during the Hopper cycle.

Similarly, Bank of America analysts reiterated their Buy rating on Nvidia shares following the report and raised their price target from $150 to $165.

BofA acknowledged that the stock is “likely to be volatile” in the near-term due to Nvidia’s forecasts missing high expectations, and noted that rising Blackwell ramp costs could hurt Q3 margins.

However, BofA remains bullish on Nvidia’s long-term prospects, stressing that it “continues to believe in NVDA’s unique growth opportunity, execution and dominant share of over 80% as generative AI deployments are still in the top 1-1, 5 years of what is at least. an initial investment cycle of 3-4 years.”

“Implementing AI remains a mission-critical imperative for global cloud and enterprise customers, with NVDA providing the best turnkey model.”

Citi moves Apple to Top Pick

Citi analysts have elevated Apple (NASDAQ: Arista Networks (NYSE: ). The move comes as Apple prepares to unveil its iPhone 16 lineup at its “It’s Glowtime” product event on September 9.

At the event, Apple is expected to introduce several key updates, including A18 chips that use the N3E process with an improved neural engine, improved camera and microphone features, and an improved modem for the Pro models.

“Apple’s September event is generally about hardware updates, but we think the company will focus a lot on how hardware updates for the iPhone 16 family can better support Apple’s Intelligence features, which are expected to be officially released later in the fall. ”, noted Citi analysts.

Looking ahead, Citi expects a major refresh with the iPhone 17 next year, with AI features being phased in over the next year. This phased release is expected to give developers time to create apps and allow Apple to build customer recognition.

Citi estimates iPhone 16 and iPhone 17 unit sales to reach 85 million and 92 million in calendar years 2024 and 2025, respectively. Total iPhone units are expected to reach 228 million in 2024 and 241 million in 2025.

The analysts also pointed out that “APL shares have outperformed the broader market on average since 2016 by 5%-6% between the June quarter earnings date and the September iPhone launch date.”

AI Bubble Burst Worries Bigger Than Recession – BCA Research

Investors should be more concerned about the potential bursting of the AI ​​bubble than a looming U.S. or global recession, according to strategists at BCA Research. The company’s analysis suggests that the risks associated with the fast-growing AI sector are more serious than those presented by broader economic downturns.

“When bubbles burst, the investment priority is to avoid the bursting bubble, plus the sectors, regions and countries heavily exposed to it.” This implies that, regardless of whether a recession follows the collapse of the bubble, the main focus should be on avoiding the areas most affected by the effects.

Accordingly, BCA Research advises investors to underweight the US technology and quasi-tech sectors, which are closely linked to the AI ​​boom, and reduce their exposure to US stocks within a global portfolio.

“Investors should worry far less about a US or global recession than they should worry about a bubble in anything AI-related,” BCA noted.

As the AI ​​sector continues to attract significant attention and capital, BCA warns that the potential for a sharp correction is a noteworthy threat.

William Blair initiates Tesla coverage with a Buy rating

William Blair initiated research coverage of Tesla (NASDAQ: ) with an Outperform (Buy) rating, driven primarily by the underappreciated potential of Tesla’s energy storage business.

The firm believes that Tesla Energy, particularly its Megapack and Powerwall products, could emerge as a significant growth driver, especially as expectations for the electric vehicle (EV) segment moderate in the near term.

“We view Tesla Energy as the most underappreciated component of the Tesla story and expect the narrative to shift to the energy storage business in light of tempered EV expectations in the near term.”

Analysts point to three key factors that make Tesla’s energy storage business a compelling investment: the need to stabilize the grid, expand data centers and integrate renewable energy sources.

These aspects, along with Tesla’s broader automotive business and emerging opportunities in AI, robotaxis and robotics, position the company as a technology leader with what William Blair describes as an “Apple ecosystem for the future of energy.”

“Energy is the foundation of life, the abundance or lack of which determines how far society can go in Maslow’s hierarchy of needs.”

Tesla’s approach to energy, through its more efficient electric vehicles, energy storage solutions and innovations such as robotaxis and humanoid robots, aims to revolutionize the way energy is created, stored and used, with broad societal implications.

While Tesla’s current valuation may seem high by traditional values, William Blair argues that this premium is justified.

“Using traditional comparable automotive or even technology analysis, we understand the difficulty in justifying the valuation, but in our view, it misunderstands the Tesla story.”

They believe the halo effect created by Elon Musk, the company’s first-principles culture and its technological advantages justify the valuation premium.

Citi Opens Positive Catalyst Watch on Marvell Shares

Citi analysts maintained their buy rating on shares of Marvell (NASDAQ: ) with a price target of $91, based on CY25 earnings per share (EPS) of 18% above consensus, following July quarter results.

The investment bank sees Marvell leveraging strong AI investments to rapidly expand its AI ASIC business, with four AI ASIC projects underway – two in development, one expected in 2025 and another in 2026.

Moreover, Citi is adding a Positive Catalyst Watch ahead of next week’s Tech Conference, where Marvell CEO Matt Murphy will participate in a fireside chat.

“We expect management to appear bullish on AI growth exceeding previous AI sales targets for 2024/25 and all non-AI end markets recovering in 2H24,” the analysts wrote.

“MRVL stock typically outperforms when all its end markets move in the same direction,” they added.