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By Louis Juricic and Salina Isaacs
Investing.com — A professional weekly roundup of the biggest tech headlines of the week. Possible new US regulation on AI. Concerns about Micron. After continuing to run furiously, Tesla’s ratings were downgraded one after another. Apple’s closing price exceeded $3 trillion.
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US Government Considers New Regulations on AI: Report
AI chip stocks Nvidia (NASDAQ:) and Advanced Inc. • Micro Devices (NASDAQ:) stalled.
The move stems from growing concerns over the potential control of the technology by US adversaries.
The report added that the Commerce Department could move as early as July to stop shipments of AI chips made by Nvidia and other chipmakers to Chinese customers. The ban also includes selling Nvidia’s A800 chips without a license.
Despite the latest news, Citi analysts believe demand for AI will outstrip supply this year, allowing Nvidia to move its chips. They maintain a ‘buy’ rating on the stock.
This week, AMD jumped 2.4% to $113.91 while Nvidia fell slightly to $423.02.
Micron Won, But Investors Still Concerned About China Risk
Micron (NASDAQ:) posted better-than-expected results, but concerns about China market share risks remained.
The stock fell 4% on Thursday and continued its decline until Friday’s close.
The company said its memory chip revenues were at a rock bottom, announcing revenue of $3.75 billion and an adjusted loss of $1.43 per share. Analysts polled by Investing.com had expected a loss of $1.59 per share on revenue of $3.67 billion.
Still, the chipmaker warned that recent decisions by China’s Cyberspace Authority are “significant headwinds” that will affect its prospects and slow the recovery.
Nonetheless, Wall Street analysts are mostly positive about Micron’s performance and outlook. Citi said its results were “ugly” as expected, but many signs point to a recovery.
“We continue to believe that the worst of the memory cycle is over and recovery is in sight,” they said in a note.
Piper Sandler analysts also set a price target of $70 per share, “given potential volume and pricing improvements in the second half of 2023, primarily based on improved end-market inventory conditions.” and raised the rating to ‘neutral’.
Multiple analysts downgrade Tesla to neutral
Tesla (NASDAQ:) shares have suffered a series of valuation-based downgrades in the past few weeks, including neutral equivalent rating cuts by Goldman Sachs, Morgan Stanley and Barclays after a surge last month. .
Since its low in late April, Tesla shares are up about 70%, while Tesla shares are up 8%.
Goldman Sachs cut the stock to neutral from buy, but analysts at the firm raised the price target to $248 from $185, reflecting higher EPS estimates and a higher target multiple. It detailed as follows:
Overall, we believe Tesla is well-positioned for long-term growth given its leading position in the EV and clean energy markets (this means that Tesla is well positioned for charging, storage, software/FSD, We attribute this in part to our ability to offer a complete solution, including service (in a direct sales model), which is now better reflected in our inventory.
While the downgrade was largely due to valuations, Goldman also highlighted a “challenging new-car pricing environment,” which it believes will hurt Tesla’s non-GAAP gross profit in 2023.
Overall, Goldman remains “positive on EV adoption and sees the most investment opportunities among our broader range of suppliers, especially those with more advanced content enabling the transition to EVs and electrification.” We are still thinking about it.”
Barclays, meanwhile, downgraded the stock from overweight to equal weight, believing the recent rally in stocks ignored questions about short-term fundamentals.
Analysts at Barclays say they’re wary of jumping on the bandwagon, even though Tesla’s stocks sometimes tend to be driven by factors beyond fundamentals. They believe the rise is largely driven by investors’ renewed love for tech stocks and excitement over Tesla’s recent announcement to open up its Supercharger network to other brands.
Relative disregard for challenges to near-term TSLA fundamentals in the midst of a sharp rally is our primary concern for the stock and is central to the downgrade to EW. There are many fundamental weaknesses in the short-term TSLA narrative.
However, he added that he remains bullish in the long term.
To be clear, we believe TSLA has significant long-term opportunity, a view that underpinned our previous overweight rating. We continue to see TSLA as a long-term winner among his OEMs in the race to the EV world, with a strong “balance of two watches”.
All of this is on top of the market seeing Elon Musk’s company as “more than just an automaker.” Still, analysts believe the market is ignoring fundamental near-term challenges.
Morgan Stanley then lowered Tesla’s stock from overweight to equal weight and raised its price target from $200 to $250, citing the stock’s “relatively good valuation and more balanced risk/reward at this level.” “It highlights the key drivers and investor debates in the stock price of the company.”
Tesla shares are up 122.8% year-to-date.
Apple surpasses $3 trillion for first time
Apple (NASDAQ:) stock closed Friday above its $3 trillion market cap. This is a first for any company.
Apple’s recent rally comes after Citi analysts launched investigative reporting with a Buy rating and a market-high target of $240 a share. They see Apple stock with more upside potential, despite gaining about 47% year-to-date.
“Apple is weathering the macroeconomic slowdown and inflationary pressures on consumer spending by steadily gaining market share in Android phones, an upside of around 30% from current levels,” analysts said in a note to clients. I see the potential for that,” he said.
They also argue that the market is underestimating continued gross profit growth. That factor, along with a growing services revenue mix and a strong balance sheet, is one of the key pillars of analysts’ bullish stance on Apple.
Apple stock briefly traded above $3 trillion in early 2022, but failed to close above that.
Senad Karaahmetovic and Yasin Ebrahim contributed to this report.
