AI stocks are not in bubbles; SMCI was downgraded by Investing.com

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

InvestingPro subscribers always receive the first observations on market-moving AI analyst comments. Upgrade today!

BofA on Nvidia stock: ‘Compelling growth at a compelling valuation’

Bank of America reiterated its Buy rating on shares of NVIDIA Corporation (NASDAQ: ) this week, noting its “compelling growth at a compelling valuation.”

Despite some short-term headwinds, BofA analysts see these challenges as an attractive buying opportunity.

Nvidia is currently facing delays in its Blackwell product line, potential regulatory scrutiny from a DOJ antitrust investigation, and broader market issues such as weak seasonality and interest rate concerns. However, BofA believes these factors could increase the stock’s buying potential, especially given its valuation.

The stock is trading at about 27 times its CY25 forecast price-to-earnings (P/E) ratio, placing it in the lowest quartile of its five-year range, which BofA sees as a favorable entry point.

Even with Blackwell’s delays, BofA points to Nvidia’s steady growth, driven by demand for its previous-generation Hopper chips. The bank also points out that Nvidia’s AI products have “consistently exceeded industry benchmarks,” signaling that the company’s AI dominance is unlikely to fade.

BofA is particularly bullish on Nvidia’s role in the next generation of large language models (LLMs), including OpenAI’s GPT-5 and Meta’s Llama 4, which are expected to bring significant advances in AI capabilities.

“AI capex is not only generating new business opportunities, it’s also critical in protecting existing moats and large profit funds in search, social and enterprise (chat, copilot) workloads,” adds the BofA team.

The firm views Nvidia as a top pick in the technology sector, with supply chain updates in the coming weeks likely to serve as a key recovery catalyst for the stock.

Microsoft, Adobe added to WF’s ‘Signature Pick’ portfolio

Wells Fargo has added shares of Microsoft Corporation (NASDAQ: ) and Adobe Systems Incorporated (NASDAQ: ) to their “Signature Picks” portfolio.

Analysts revealed in a note on Wednesday that they opened a 4% position in Microsoft, citing the company’s “cloud positioning and (artificial intelligence) leadership.”

They pointed out that AI was a key factor in the second-half strength of Microsoft’s Azure cloud division.

The analysts also initiated a 2% position in Adobe, noting that “design is one of the most tangible use cases” of generative AI.

They added that concerns about competition in the space are “overblown” and stressed that “Adobe’s moat remains robust.”

AI stocks are not in a bubble, but the risks of concentration are elevated

In a note on Thursday, Goldman Sachs strategists dismissed concerns that the AI ​​sector is in a bubble, although they warned that concentration risks remain high due to the dominance of a few large-cap companies.

Since 2010, the technology sector has accounted for 32% of global stock performance, driven by strong fundamentals and the introduction of transformative technologies such as AI. Despite the rapid rise in valuations, Goldman believes AI is “likely to continue to dominate returns” rather than signaling a bubble.

The report points to the “Magnificent Seven” — large U.S. technology companies such as Apple (NASDAQ: ), Microsoft and Nvidia — that now hold significant market share.

These companies, backed by robust earnings and substantial investments in artificial intelligence, show no signs of the irrational exuberance seen in past bubbles such as the dot-com boom of the late 1990s. Their profitability and cash flows justify their valuations, which remain well below tech bubble levels.

However, Goldman warns that market concentration is at historic levels. The top 10 companies now account for more than a third of , while the five largest companies account for 27% of the index’s total value.

Strategists are questioning whether this AI-driven surge in tech stocks could be approaching bubble territory, or whether the concentration of power in a few companies is creating a “dangerous trap” for investors.

On the other hand, this concentration could provide “an opportunity to diversify into potential beneficiaries of these technologies through cheaper companies outside the dominant few,” the note added.

Mizuho Adds Micron, Oracle Stocks to Top Picks List

Mizuho analysts have added Micron Technology Inc (NASDAQ: ) and Oracle Corporation (NYSE: ) to their Top Picks List, the investment bank’s selection of high-conviction, catalyst-driven ideas.

For Micron, a key player in the AI ​​boom, analysts expect the company to benefit from better prices in DRAM and NAND, with AI-related tailwinds boosting HBM’s market share. Micron’s partnership with NVIDIA, in particular, is expected to support these gains.

Mizuho projects that HBM3E will capture around 70% of the HBM market by 2025, with Micron continuing to be an important supplier for NVIDIA’s AI GPU ramp. This could drive HBM share growth in the second half of 2024 and into 2025. Analysts also anticipate that AI devices will require double the DRAM and NAND content compared to traditional devices by 2025.

Although a yield issue with Micron’s HBM hurt margin expansion in the November quarter, Mizuho analysts believe margins could improve through 2025 as HBM accounts for a larger share of revenue and utilization rates for DRAM and NAND .

“We believe corrections in most consumer markets are nearly complete, but demand headwinds remain as refresh cycles for phones and PCs appear extended from prior years,” they noted.

As for Oracle, Mizuho believes the company’s cloud infrastructure (OCI) is undervalued.

Its competitive pricing, about 33% lower than AWS, positions Oracle to capture more enterprise customers as they move from on-prem to cloud solutions. Analysts expect Oracle’s strong local customer base to serve as a significant revenue driver.

In addition, they are confident that Oracle can expand its operating margins to 45% by FY26 through “cloud margin expansion, sales and R&D efficiency and scale leverage.”

SMCI shares downgraded to JPMorgan due to regulatory uncertainty and competitive pressures

JPMorgan analysts downgraded Super Micro Computer (NASDAQ: ) from overweight to neutral on Friday, with the company’s shares down more than 3% after the market opened.

Analysts pointed out that while they remain confident in Super Micro’s ability to regain regulatory compliance, near-term uncertainty is a key factor in the rating change.

They explained that “a short-term view where there is no clear rationale for new investors entering SMCI shares, while there is uncertainty around regaining regulatory compliance, which is essential beyond the unchanged fundamentals of the business”.

JPMorgan also expressed concerns about the company’s potential response to competitive pressures in the AI ​​server market. Analysts noted that aggressive pricing to retain customers could hurt margins, potentially prompting a competitive response from peers.

The firm believes that while meeting regulatory requirements could serve as a positive catalyst, investors are likely to wait for clearer signs that customer demand and margin prospects remain stable before fully committing.

In light of these uncertainties, JPMorgan is advising new investors to hold off on taking positions until the company regains regulatory compliance.

The firm also cut its December 2025 price target to $500 from $950, reflecting lower earnings more in line with traditional IT hardware companies, which typically see slower growth.