Nvidia top November pick, SMCI downgraded By Investing.com

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

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Nvidia stock new Top Pick at Mizuho for November

Mizuho has named Nvidia (NASDAQ:) as its top pick for November, stressing the company’s strong leadership in the AI and data center market.

The firm reiterated an Outperform rating and set a price target of $140, highlighting Nvidia’s dominance in AI training and inference chips for data centers, where it reportedly commands over 95% of the market share.

Mizuho anticipates substantial growth in the data center AI chip market, projecting a compound annual growth rate of 74%, potentially pushing the market size past $400 billion by 2027. This expansion is expected to be driven by Nvidia’s advanced product lineup and roadmap, which includes the H200, GB200, and GB300 chips scheduled for rollout in 2024 and 2025.

Moreover, Nvidia’s Grace CPU and NVL36/72 servers are seen as catalysts for content growth within AI servers.

Beyond its data center strength, Nvidia continues to excel in the gaming market, where it holds an estimated 75% market share in PC gaming GPUs. Mizuho sees growth potential here, noting, “We believe headwinds from China AI chip restrictions remain muted.”

The firm also points to an upgrade cycle opportunity with the upcoming RTX 50-series, given that penetration of the RTX 40-series stands at around 10% of the PC market, which could position Nvidia to reach a gaming revenue run rate exceeding $10 billion annually.

Mizuho also underscores Nvidia’s competitive edge over rivals AMD (NASDAQ:) and Intel (NASDAQ:). Although AMD’s MI300 and Intel’s Gaudi3 chips are advancing, Mizuho expects Nvidia to retain its lead due to the performance improvements offered by its Blackwell architecture, which also allows for more efficient pricing and enhanced average selling prices.

Trump win bullish for Big Tech: Wedbush

Wedbush analysts anticipate a robust bullish response from tech stocks to Donald Trump’s victory in the US presidential election, especially in case of a potential “red sweep” across Congress.

According to the investment bank, a Trump administration is likely to spotlight AI initiatives in the US, benefiting leading tech giants like Microsoft (NASDAQ:), Amazon (NASDAQ:), and Google (NASDAQ:).

Wedbush notes that these initiatives, particularly within government agencies such as the Department of Defense, could provide a strong lift for AI-focused firms like Palantir.

While major changes to the Inflation Reduction Act (IRA) may impact companies like Intel unfavorably, Wedbush analysts, led by Dan Ives, believe that AI will be “front and center in our view and benefit Big Tech.”

Another possible advantage for tech companies under Trump’s leadership would be the departure of Lina Khan from the Federal Trade Commission (FTC).

Khan has been a formidable opponent for the tech sector, challenging deals and scrutinizing major players. Analysts highlight that her potential exit would be “a huge positive for Big Tech,” as it could open doors for increased deal activity across the industry.

Moreover, Elon Musk, a prominent Trump supporter, could influence Khan’s departure, potentially expediting a shift favorable to tech firms. While anti-trust issues remain, particularly with the Department of Justice’s actions against Google and Apple (NASDAQ:), a change at the FTC would likely remove one of the biggest obstacles for Big Tech.

Wedbush analysts also argue that Tesla (NASDAQ:) and Musk stand to gain the most from a Trump victory. Though the broader electric vehicle (EV) sector might face setbacks if EV rebates and tax incentives are rolled back, Tesla’s unique scale and market position could give it a distinct edge in an unsubsidized environment.

JPMorgan cuts SMCI to Sell

JPMorgan downgraded Super Micro Computer (NASDAQ:) from Neutral to Underweight on Wednesday, setting a new price target of $23, down from $50. The bank cited rising uncertainties regarding both Super Micro’s business fundamentals and financial reporting practices.

A significant driver behind the downgrade is a lack of transparency. JPMorgan analysts pointed out that “the company refrained from providing further transparency around the issues leading to the disagreement with the prior auditor (E&Y) even as it reaffirmed the Special Committee opinion that the Audit committee had acted independently and that there is no evidence of fraud or misconduct.”

Further concerns stem from the company’s management, particularly the absence of a commitment to leadership changes. The delay in appointing a new auditor is seen as a setback, potentially extending the firm’s noncompliance with SEC filings.

On the business front, JPMorgan notes a slowdown in demand for Super Micro’s current Hopper-based servers, as customers anticipate next-generation Blackwell-based products. This demand shift could pressure Super Micro into lowering prices, which could compress margins in an already competitive market.

The analysts also highlighted Super Micro’s “$5 billion of inventory on the balance sheet,” suggesting this inventory level could increase pricing risk if demand continues to ease.

They expressed additional concerns about Super Micro’s ability to sustain gross margins within its target range of 14-17%.

Delays in next-generation GPU products might hinder the company’s competitive position in AI servers, putting it at risk of losing market share, particularly within the enterprise segment, to other server providers.

Broadcom could grow AI revenues at 35% CAGR, says BofA

Bank of America analysts see strong growth potential for Broadcom (NASDAQ:) in AI-related revenues, with a projected compound annual growth rate (CAGR) of 30-35% over the next few years.

Reaffirming a Buy rating on the stock, BofA highlighted Broadcom’s strengths in AI compute and networking, along with its solid free cash flow generation.

The bank has lowered its fiscal 2025 earnings forecast for Broadcom due to “seasonal headwinds,” particularly from a product transition involving Google’s Tensor Processing Unit (TPU), which is expected to impact revenues mainly in the first half of the year.

Nevertheless, BofA anticipates that this dip will be offset by new AI and networking contracts, along with expanded content opportunities with Apple. These factors are expected to drive Broadcom’s earnings per share (EPS) to an adjusted $7.31 by 2026.

Broadcom’s recent decision to revert to quarterly guidance could draw more focus to seasonal fluctuations and “lumpy AI shipment,” but BofA analysts remain positive about the company’s long-term AI outlook.

They estimate that AI-focused networking and custom chip sales could increase AI-related revenue from roughly 23-24% of Broadcom’s current sales to over 30% by fiscal 2026.

BofA also pointed to Broadcom’s strategic positioning in AI, noting that partnerships with customers like OpenAI may boost growth beyond 2026.

As AI adoption accelerates, BofA sees Broadcom’s focus on high-performance AI networking solutions—especially those that complement NVIDIA’s upcoming Blackwell architecture—as key to reinforcing its role in the industry.

Argus downgrades Palantir stock on valuation concerns

Earlier in the week, Argus analysts downgraded Palantir Technologies Inc (NYSE:) from Buy to Hold, highlighting concerns that the stock’s recent rally may be outpacing the company’s fundamentals.

While Palantir delivered a strong third quarter with accelerated revenue growth and expanding margins—driven by renewed momentum in its core US government business and continued growth in the US commercial market—Argus’s team noted that shares, which have nearly tripled in value this year, may now be overvalued.

Palantir’s business model focuses on serving a niche segment of clients with highly complex IT needs, which can result in uneven financial results.

Analysts cautioned that such volatility could lead to sharp market reactions, particularly for highly valued tech stocks like Palantir. Traditionally serving the US defense and intelligence sectors, Palantir has broadened its offerings to the commercial sector, where its data management and analytics platforms address intricate business challenges. In 2023, government contracts still comprised 55% of the company’s revenue.

“While we expect this segment to continue to grow, the commercial business, particularly in the US, looks to be its future growth driver,” analysts stated.

Like other enterprise software firms, Palantir is increasingly reliant on AI-powered applications to fuel growth. Despite the downgrade, Bonner maintained a positive outlook on the company’s long-term potential.