Analyst says Nvidia sell-off has gone too far
Morgan Stanley said the recent pullback in Nvidia shares appears disconnected from the company’s strong near-term fundamentals, noting that investors remain puzzled by the stock’s underperformance despite a “very robust AI environment.”
Analyst Joseph Moore said his team was “somewhat surprised” by Nvidia’s year-to-date weakness following a soft finish to 2025. He added that investors frequently ask what factors drove the decline and how those pressures could dissipate in 2026.
Moore said business checks remain “very strong and getting stronger,” while market optimism around upcoming earnings is building. He noted growing discussion of Nvidia’s earnings power exceeding $9 per share this year, well above the consensus estimate of $7.75, which he believes makes near-term upside “highly likely.”
In his view, several concerns weighing on sentiment are exaggerated. Moore said AI beneficiaries are expanding as demand accelerates and supply constraints spread across the industry. He also addressed investor focus on financing risks tied to frontier AI model developers and Nvidia’s involvement, saying this will require some recalibration in how the market assesses the risk.
Concerns about rising competition from custom ASICs and AMD persist, but Moore described them as overblown. Looking ahead, he highlighted Nvidia’s upcoming Vera Rubin platform as a key catalyst that should reinforce the company’s technology leadership and help alleviate momentum concerns.
“Ultimately, we expect the stock to outperform from here,” Moore wrote, adding that while Nvidia still faces a “wall of worry,” it appears well positioned to move past it.
Lynx warns Apple margins under renewed pressure as NAND prices jump
Lynx Equity Strategy warned that Apple could be facing a deeper profitability squeeze than investors currently expect, arguing there is “further downside” to the stock even after its roughly 10% decline this year.
The brokerage said channel checks point to rising memory costs, with Apple confronting a sharp increase in NAND flash prices after talks with long-time supplier Kioxia broke down. Lynx said tensions emerged after Apple secured lower long-term pricing that created a margin gap for Kioxia, potentially leading the supplier to ship below Apple’s projected demand.
As a result, Apple has reportedly turned to Samsung to cover the shortfall. Without long-term supply agreements, Lynx said Samsung can charge prevailing market rates, which may be significantly higher. A Taiwan report cited by the firm suggested Samsung may have lifted NAND prices by as much as 100%, with Apple likely among the affected customers.
Lynx also highlighted technical risks, noting that Apple’s flash controller is optimized for Kioxia’s NAND process and may not perform as effectively with Samsung’s chips, increasing the possibility of performance issues or product returns.
“The Street is underestimating the impact,” Lynx said, warning that both Apple’s margins and its share price could remain under pressure in the coming period.
Barclays upgrades ASML on record orders, sees further upside
ASML shares moved higher earlier in the week after Barclays upgraded the stock to Overweight, pointing to record order growth, accelerating AI-driven demand and upside potential that it says the market has yet to fully reflect.
Analyst Simon Coles said expectations were already elevated going into the results, but those hopes were exceeded as orders hit record levels, prompting significant upward revisions to forecasts. Barclays raised its price target to €1,500 from €1,200, arguing there is still “room for further upside” given what it views as conservative guidance despite improving fundamentals.
ASML reported record order intake of €13.2 billion, almost double last year’s figure and well above market expectations. The company also increased its 2026 revenue outlook to a range of €34 billion to €39 billion, surpassing consensus estimates and improving on its prior outlook for largely flat growth versus 2025.
In addition to the strong demand outlook, ASML announced plans to reduce its workforce by around 1,700 roles as part of a broader restructuring effort aimed at simplifying management structures while increasing investment in engineering capacity.
Barclays said lithography demand linked to large-scale data center construction remains a key growth driver for ASML, while further upside could emerge from consumer AI adoption, humanoid robotics and a more resilient memory spending cycle.
The bank also highlighted intensifying foundry competition as a particularly supportive factor. Analyst Simon Coles said increased rivalry is likely to spur higher capital investment, creating upside risk that should benefit ASML and the broader semiconductor capital equipment sector through 2027.
Concerns around China were described as overstated. Coles noted that ASML’s guidance already assumes China revenue declines of more than 10% year over year at the start of 2026, but recent strength in imports suggests demand remains robust.
Barclays now forecasts low-teens revenue growth for ASML in both 2026 and 2027, translating into mid- to high-teens earnings upgrades, with additional upside possible if AI investment and foundry spending accelerate beyond current expectations.
Mizuho lifts Applied Materials on strengthening chip equipment demand
Applied Materials was upgraded to Outperform from Neutral by Mizuho, which cited a sharp rebound in semiconductor capital spending and improving demand from foundry and logic customers.
Analyst Vijay Rakesh raised the firm’s price target to $370 from $275, saying Applied Materials is positioned to benefit from a “meaningful acceleration” in wafer fab equipment (WFE) spending through 2027. Mizuho now forecasts WFE growth of 13% year over year in 2026, followed by 12% growth in 2027, marking a notable step-up from its prior outlook.
With roughly 65% of revenue exposed to foundry and logic customers, Rakesh highlighted rising capital expenditures from TSMC and improving tool spending at Intel as key growth drivers. TSMC’s capital spending from 2026 to 2028 is expected to be significantly higher than in the 2023–25 period, with 2026 outlays alone projected to climb 32% to about $54 billion.
Memory demand is also seen as supportive, with DRAM tied to high-bandwidth memory accounting for roughly 30% of Applied Materials’ revenue base. While China remains a headwind, with revenue from the region expected to decline 4% this year, Rakesh said growth elsewhere — representing about 70% of sales — is accelerating more rapidly.
He added that AI-driven investment is pushing leading-edge development below the 2-nanometer node, and said the broader recovery in global WFE spending is creating “strong tailwinds” for equipment suppliers, underpinning the upgrade and higher earnings estimates for 2026 and 2027.
BofA reiterates Snowflake as top software pick, says AI to accelerate growth
Bank of America said Snowflake remains “one of the fastest-growing stories in software,” reaffirming its Buy rating and keeping the stock as a top pick within infrastructure software.
Analyst Koji Ikeda said Snowflake is well positioned to benefit from accelerating enterprise investment in data analytics and artificial intelligence, given its role as a core cloud data platform. He said the key investor debate is whether Snowflake can sustain product revenue growth in the high-20% year over year range or even reaccelerate into the 30s — an outcome he believes is achievable.
Ikeda pointed to Snowflake’s expanding product portfolio, strong AI-related demand and rising customer consumption as key growth drivers. “The blizzard is just starting to form around broad AI adoption, and we believe Snowflake will play a foundational role,” he wrote.
BofA expects Snowflake’s growth to remain top-tier within infrastructure software, far outpacing peers growing at around 10%. The bank also raised its price target to $275, reflecting an updated valuation framework incorporating its revised growth outlook, risk assessment and peer multiple trends.
Ikeda described Snowflake as increasingly becoming the “king of enterprise data in the cloud,” highlighting its OLAP data lakehouse architecture, which enables customers to scale compute and storage independently to optimize performance and costs.
While acknowledging that the shares are not inexpensive — trading at a roughly 123% premium to peers — Ikeda said the valuation appears more reasonable on a growth-adjusted basis, where Snowflake trades in line with its peer group.
Sources: Investing
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