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In a note to clients, the research firm said that current consensus expectations project GPU revenues to rise by 35% in 2025, matching their prior forecast. Analysts said they see “limited further upside based on what we hear from the value chain.”

“We downgrade the stock to Neutral today, as the upside will only materialize in a bull case, in which the outlook beyond 2025 increases materially, and we do not have the conviction on this scenario playing out yet.”

New Street highlighted that the consensus expects revenue growth to decelerate to the mid-teens, which may be at risk due to potential reductions in hyperscale capital expenditures and growing competition from ASICs and AMD (NASDAQ:).

Analysts indicated that without a change in outlook, they do not see further upside for the stock. They warned of the risk of a possible derating, noting the stock currently trades at 40x next twelve months earnings per share (NTM EPS), compared to a low of 20x when growth slowed to 10% in 2019, before rebounding to 35x.

New Street values Nvidia at 35x earnings, consistent with the multiple seen in late 2019 and early 2020. With an estimated EPS of $4.1 in 2027, this translates to a target price of $143 in 2026, suggesting limited upside over the next two years.

New Street set a one-year target price for NVDA at $135.

“The quality of the franchise is nevertheless intact, and we would be buyers again, but only on prolonged weakness,” analysts wrote.

UBS cuts Pure Storage (NYSE:) to Sell, ‘too much credit given to AI’

All-flash data storage solution provider Pure Storage saw its stock receive a downgrade at UBS, from Neutral to Sell earlier this week.

The investment bank highlighted an unfavorable risk-reward profile for the stock, citing slowing growth, declining market share, high valuation, and “too much credit given to AI.”

The analysts forecast PSTG’s growth to slow to around 8% over the next five years, down from 16% in the past five years. They expect the company’s all-flash storage market share to stabilize around 15%. UBS’s revenue projections for fiscal years 2026 and 2027 are 6% and 10% below consensus, respectively.

The downgrade also reflects a decrease in market share, with Pure’s share of the all-flash storage market falling by approximately 80 basis points to 14.5% in the last twelve months, as competitors like NetApp (NASDAQ:)’s C-series gain traction with enterprise customers.

Moreover, UBS noted the stock’s significant rise, about 83% year-to-date, compared to the ‘s 15% gain, despite a 1% drop in revenue expectations for fiscal years 2025 and 2026.

Lastly, analysts mentioned that while AI infrastructure investments have boosted PSTG’s valuation, “AI-related storage spending will likely be slower than the market expects and more tied to inference, a slower growth market than training.”

Dell new Top Pick at BofA

Analysts at Bank of America have added Dell to their US 1 List, a selection of the bank’s top investment ideas.

In a note to clients, Bank of America raised its target price for Dell shares to $180 from $130, citing a positive outlook for the company heading into 2025. The bank highlighted factors such as AI server demand, storage demand from an expected IBM (NYSE:) mainframe refresh, and demand from an anticipated PC refresh.

“Dell Technologies (NYSE:) World 2024 took place May 20th-23rd where Dell introduced Dell AI Factory and expanded its AI portfolio with 5 new AI-PCs, all-flash file storage, network architecture, and AI services offerings,” note BofA’s team.

“We see these new products supporting Dell’s growth in C25,” it added.

The brokerage firm also mentioned that Dell’s potential inclusion in the S&P 500 is another catalyst for the stock.

Mizuho: Amazon (NASDAQ:) nearing AI inflection point

Amazon is close to reaching a key AI inflection point, Mizuho analysts said in a note this week, citing a recent customer survey with a major channel partner.

The survey highlighted several trends suggesting accelerated growth for Amazon Web Services (AWS).

“We see an accelerated sales cycle from increased demand of ECB meetings and incremental exits of data center contracts,” the note writes. Enterprises are finalizing proposals and prepaying contracts to leave data centers, speeding up AWS’s sales cycle.

While infrastructure spending remains dominant, Mizuho said that “cost optimization is being offset by new services such as app monitoring, chatbot deployments, and large migration programs.” This shift indicates a move towards higher-value services on AWS.

The most exciting development, according to Mizuho, is the progress on Generative AI projects.

“The survey shows external-facing models (20% of total) are only 6 months away from commercial deployment,” the note says, implying a potential surge in inferencing activity as these models are deployed to a large external customer base.

BofA lifts PTs on European chip stocks

Bank of America has raised its price targets for several European chipmakers, driven by continued strength in AI demand.

The bank’s analysts raised their targets for several semiconductor capital equipment (semicaps) and subsystem suppliers, including Nokia (HE:), Nordic Semiconductor (OL:), Technoprobe, and Comet.

Nokia’s target is now €3.96, up from €3.58, reflecting “AI optionality.” Nordic Semiconductor’s target increased to NOK 169 from NOK 161, supported by improving end demand and higher estimates. Technoprobe’s target is set at €10.60, up from €9.40, due to its unique AI exposure. Comet’s target rose to CHF 448 from CHF 409.

However, BofA reduced Aixtron’s target to €20.5 from €25 due to lower expectations for gallium nitride (GaN), silicon carbide (SiC), and MicroLED.

ASML (AS:) remains a top pick among semicaps for BofA, driven by the increased lithography intensity needed for AI chips.

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