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5 key forecasts on AI companies
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The Q3 earnings season is in full swing. Banks and investment advisors are offering numerous recommendations for each company.
However, the most interest for traders lies in the tech sector, particularly in companies actively investing in artificial intelligence. Here are the 5 key forecasts for traders at the moment.
BofA sees another 40% growth in Nvidia shares
Investment bank Bank of America has maintained a “Buy” rating on Nvidia shares, while raising the target price from $165 to $190. This forecast suggests a potential increase in share price of nearly 40% compared to current market levels.
In addition to maintaining a positive outlook, BofA analysts also raised their earnings per share forecasts for Nvidia for 2025 and 2026 by 13% and 20%, respectively.
BofA’s optimism is based on several factors. First, Nvidia holds a dominant position in the market, controlling 80-85% of the share. The company operates in a rapidly growing total addressable market, valued at over $400 billion. Second, recent industry events, such as the successful earnings report from Taiwan’s chip maker TSMC and an AI-focused event by AMD, confirm strong demand for Nvidia’s products, particularly the new Blackwell chips.
Moreover, analysts emphasize that the market is underestimating several factors driving Nvidia’s growth. These include strategic partnerships with major corporations like Accenture, ServiceNow, and Oracle, as well as its software solutions. Nvidia’s strong free cash flow also deserves attention, with BofA predicting a margin of 45-50%, significantly higher than that of the tech giants in the “Magnificent Seven.”
Citi issues a negative catalyst report on Qualcomm
Analysts from Citigroup have published a negative outlook for Qualcomm, which led to a decline in the company’s stock. The primary reasons for this pessimistic scenario are a slowdown in demand for mobile phones and other electronic devices, as well as several structural issues in the industry.
Citi’s report highlights an oversupply of mobile phones, negatively impacting semiconductor demand, a key product for Qualcomm. Additionally, analysts express concern over declining demand in both the personal computer and wireless communication sectors, which are significant markets for the company.
Citi also warns of the potential loss of a major customer, Apple. Analysts predict that starting in 2025, Apple may stop using Qualcomm components, which would negatively impact the company’s financial results.
Considering these factors, Citi has lowered its profitability forecasts for Qualcomm for Q4 of this year by 11% compared to the consensus forecast. Moreover, Citi projects weak results for the semiconductor sector as a whole in Q3.
Race for $4 trillion market cap continues, according to Wedbush
Wedbush analysts predict fierce competition between major tech giants—Nvidia, Apple, and Microsoft—on their way to achieving a record market capitalization of $4 trillion. In a recently published report, they note that this race has already begun and will intensify over the next 6-9 months.
Wedbush identifies Nvidia’s dominance in AI-driven data center spending as the key factor determining success in this race. The analysts emphasize that Nvidia’s GPUs are essential components for running generative AI models, giving the company a significant competitive advantage.
Wedbush considers Nvidia and Microsoft as pioneers in artificial intelligence but notes that other companies are actively seeking to claim their share in this rapidly growing market.
The investment firm estimates that around $1 trillion will be invested in AI infrastructure over the next three years, laying the foundation for a new era of artificial intelligence.
HSBC raises target price for TSMC
Analysts from HSBC have raised the target price for Taiwan Semiconductor Manufacturing Company (TSMC) shares to 1,600 Taiwanese dollars, maintaining a “Buy” recommendation. Despite reduced capital expenditures this fiscal year, HSBC confirmed its forecasts for next year, expecting substantial investments in new technologies.
Analysts are particularly focused on the promising 2-nanometer chip technology. They expect this technology to start generating significant revenue for the company in the second half of 2025. This is due to the expected high premium for 2-nanometer chips compared to earlier technologies and greater client interest. HSBC predicts that production capacity utilization for 2-nanometer chips will surpass that of the previous 3-nanometer chips, positively impacting the company’s margins.
According to HSBC, TSMC’s revenue from 2-nanometer chips in 2026 could reach 568 billion Taiwanese dollars, significantly exceeding market expectations. For comparison, revenue from 3-nanometer chips in their first full production year was about 160 billion Taiwanese dollars.
Given these optimistic forecasts, HSBC has raised its gross profit estimates for TSMC over the next three years, citing the successful launch of new technologies and growing demand for its products.
Citi upgrades Cisco to “Buy”
Citigroup analysts have upgraded Cisco Systems’ stock rating from “Neutral” to “Buy,” citing the company’s growing potential in artificial intelligence.
In their report, analysts note that although AI currently contributes only about 2% of Cisco’s revenue, the company has significant growth prospects in this market segment. Citi forecasts an increase in Cisco’s share of the Ethernet switch market, used to connect devices powered by GPUs necessary for data processing in AI systems.
The analysts revised their estimates, expecting Cisco’s share of the AI Ethernet switch market to reach the “high 40%” range, exceeding previous estimates. They also anticipate accelerated market growth in 2026, with Cisco’s share potentially exceeding 50%.
Cisco confirmed these expectations by announcing additional AI-related orders worth $1 billion in the current fiscal year. Furthermore, the company projects that the hyperscale AI segment could reach $9 billion by 2027.
Given these positive prospects, Citi has raised Cisco’s target share price, citing the company’s growing potential in AI. The analysts believe that Cisco’s stock is undervalued compared to its competitors and has significant growth potential.
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