An analyst says Nvidia's decline is exaggerated.
According to Morgan Stanley, the recent weakness in Nvidia shares appears inconsistent with the strength of short-term fundamentals, stating that investors are still focused on why the stock is lagging behind in a very strong AI environment.
Analyst Joseph Moore said the team was somewhat surprised by Nvidia's poor performance since the start of the year following a weak close for 2025, adding that one of the most frequently asked questions by investors is what drove the decline and how those hurdles can be overcome in 2026.
He said the indicators remain very strong and are getting stronger, while optimism about earnings is already growing across the market. Moore noted that he is increasingly hearing signals of strong earnings of over $9+ this year, compared to expectations of $7.75, making a near-term uptrend highly likely.
Many of the concerns weighing on sentiment appear to be exaggerated, according to the analyst. Moore pointed to the fact that the number of AI beneficiaries is expanding as demand accelerates and supply constraints spread across the industry.
Some investors are also focusing on funding issues related to advanced model developers and Nvidia's role in that funding, which Moore said will require some adjustment in how the market interprets risk.
At the same time, concerns about increased competition from custom ASICs and Advanced Micro Devices are still emerging but are exaggerated, according to the analyst.
Looking ahead, Moore highlighted the upcoming Vera Rubin platform as a key catalyst that should provide a strong demonstration of Nvidia's leadership and help alleviate concerns about market share momentum.
The bottom line is that we see the stock outperforming from here, he wrote, noting that while Nvidia still has a wall of concerns to climb, the company looks well-positioned to overcome it.
Linux warning: Apple faces renewed margin pressures as NAND costs rise
Apple may be headed for more severe pressure on profitability than the market is pricing in, according to brokerage firm Lynx Equity Strategy, which sees further downside for the stock even after it has fallen by about 10% so far this year.
The company said its channel checks indicate rising memory costs, as Apple now faces the unpleasant prospect of a sudden spike in NAND flash memory prices after talks with longtime supplier Kioxia broke down.
Lynx wrote that bad blood developed after Kioxia's low pricing for a long-term agreement with Apple led to a margin shortage for the supplier. As a result, Kioxia may be shipping fewer units to Apple than Apple anticipates, forcing the company to look elsewhere for supplies.
This shift could be costly. Lynx analysts said Apple was forced to turn to Samsung to fill the supply gap, and without long-term contracts, Samsung is free to offer the current market price, perhaps at much higher levels.
A Taiwanese nighttime report cited by Lynx indicates that Samsung has raised NAND prices by as much as 100%, with Apple potentially among the affected customers.
In addition to the higher costs, Lynx also pointed to technical concerns. Apple's flash controller is optimized for Kioxia's NAND process and won't work well with Samsung's NAND process, increasing the risk of performance issues and product returns.
Lynx said the market is underestimating the impact, warning that both margins and stocks could remain under pressure in the coming period.
Barclays raises its ASML target for these reasons
ASML shares rose earlier this week after Barclays upgraded the stock to overweight, citing rising orders, accelerating demand driven by artificial intelligence, and upside scenarios that it believes are still not fully priced in.
Analyst Simon Coles said: Expectations were high before the results, but hopes were realized with record orders driving substantial upgrades to the estimates.
Barclays raised its price target to €1,500 from €1,200, arguing that there is still room for further upside as ASML's guidance appears conservative despite strengthening fundamentals.
The company reported record orders of €13.2 billion, nearly double last year's level and significantly exceeding expectations. It also raised its 2026 revenue forecast to €34 billion–€39 billion, surpassing consensus expectations and showing stronger growth than its previous outlook, which projected largely stable growth compared to 2025.
Alongside the optimistic demand picture, ASML announced plans to cut approximately 1,700 jobs as part of a broader restructuring aimed at streamlining management while expanding engineering capability.
Barclays said that demand for lithography related to the construction of large-scale data centers remains a key driver, while additional upswing could come from consumer adoption of artificial intelligence, humanoid robots, and a more robust memory spending cycle.
Competition in the foundry was noted as particularly supportive, with Coles pointing to the upside risks from such competition driving increased investment that should benefit ASML/semicap through 2027.
At the same time, concerns about China were also deemed exaggerated. These appear unnecessary for 2026, with ASML wisely setting guidance indicating a more than 10% year-on-year decline in Chinese imports to begin with, but recent import strength suggests that demand remains robust, Coles wrote.
The analyst now expects low double-digit revenue growth in 2026 and 2027, leading to mid- to high double-digit earnings upgrades, with the potential for further upside if AI investment and foundry spending accelerate faster than anticipated.
Mizuho upgrades Applied Materials' rating as spending on chip equipment increases
Applied Materials was upgraded to Outperform from Neutral by Mizuho on Wednesday, as the company cited a sharp rebound in capital spending on semiconductors and improved demand across its foundry and logic customers.
Analyst Vijay Rakesh raised the stock's price target to $370 from $275, saying the company is poised to benefit from a significant acceleration in spending on wafer factory equipment (WFE) through 2027.
Mizuho now expects WFE to grow by 13% year-on-year in 2026, followed by another 12% in 2027, which represents a significant acceleration compared to our previous forecast.
With nearly 65% of revenue associated with foundry and logic customers, Rakesh pointed to increased capital expenditures from TSMC and improved spending on tools in the Intel group as key drivers of growth.
TSMC's capital expenditures between 2026 and 2028 are expected to be significantly higher than they were in the 2023-25 period, with spending in 2026 alone projected to increase by 32% to $54 billion.
Demand for memory is also expected to provide support. Rakesh said that high-bandwidth memory (HBM)-linked DRAM should remain strong, representing about 30% of Applied Materials' revenue base.
While China remains a drag, with the company's revenue from there expected to decline by 4% this year, the analyst said the rest of the world—accounting for roughly 70% of sales—is growing at a faster pace. He added that AI-driven investment is fueling advanced development in sub-2-nanometer technology.
Rakesh said the broader rise in global spending on WFE is creating strong tailwinds for all WFE suppliers, supporting its upgrade and higher estimates for 2026 and 2027.
Bank of America Group maintains Snowflake as a top choice
Bank of America (BofA) said Snowflake remains one of the fastest-growing stories in software, reaffirming its buy-and-hold rating as a top choice within software infrastructure.
Analyst Koji Ikeda said the bank believes Snowflake is well-positioned to capitalize on the accelerating spending by enterprises on data analytics and artificial intelligence, given its role as a key cloud data platform.
In a note to clients, Ikeda said the central question for investors is whether Snowflake can maintain product revenue growth in the top 20% year-over-year or perhaps accelerate back into the 30s. He argued that this outcome is entirely achievable, citing a broader product portfolio, strong AI-related demand, and increasing customer usage.
The snowstorm is just beginning to take shape on the widespread adoption of artificial intelligence, and we believe Snowflake will play a foundational role, he wrote.
Bank of America expects Snowflake's growth trajectory to remain top-tier in software infrastructure, significantly ahead of peers growing at around 10%.
The bank also raised its target price to $275, saying it had updated its assessment framework to reflect its updated view of growth, risk, and shrinking peer multiples.
Snowflake is rapidly becoming the king of enterprise data in the cloud, Ikeda said, referring to its Lake House OLAP architecture, which allows customers to scale computing and storage independently to improve performance and manage costs.
While acknowledging that the stock is not cheap, with shares trading at a 123% premium to peers, the analyst said the valuation appears more reasonable based on the growth rate, as Snowflake trades at the same multiple.
