Technology

Apple Eyes Higher Profitability, Premium Mix and In-House Technologies Drive Margin Boost: Analyst

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BofA analyst Wamsi Mohan maintained a Buy rating on Apple Inc (NASDAQ:AAPL) with a price target of $225. Mohan noted that historically, Apple investors have tended to look at existing products and the profitability associated with those products and services to measure the company’s future performance. He went back to 2018 to see where the 2023 consensus gross margins were in 2018. The Street was modeling fiscal 2023 gross margins for Apple at 39%, but Apple printed 44% gross margins, significantly exceeding (500bps) original expectations. Mohan noted that the Street continues to underestimate Apple’s long-term gross margin potential across both products and Services yet again. He emphasized about 180bps of Product gross margin upside and about 150bps of Services margin upside over the next few years. He noted that Apple’s gross margins are headed significantly higher, driven by an increased mix of services within the overall portfolio, which should account for about 60bps […]

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ServiceNow Likely to Benefit From Customer Market Growth, Oppenheimer Says

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ServiceNow (NOW) has a large growth opportunity in the customer market, Oppenheimer said in a note Thursday following a recent interview with a “large” ServiceNow partner. “Customer workflows are time-consuming and manual, requiring updating records, exchanging spreadsheets, and other processes,” Oppenheimer said. “In our view, the opportunity is ripe for ServiceNow to disrupt this market by leveraging AI and its integration architecture to help organizations maintain records and service needs in real-time.” The ServiceNow partner experienced robust business activity and pipeline momentum in Q1, according to the firm. “ServiceNow remains well positioned to leverage its position as a leading enterprise integration engine and impresses us with its technology-vision and execution,” Oppenheimer said. Oppenheimer maintained ServiceNow’s outperform rating and $825 price target.

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CFRA Maintains Buy Opinion On Shares Of Apple Inc.

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CFRA, an independent research provider, has provided MT Newswires with the following research alert. Analysts at CFRA have summarized their opinion as follows: Shares are up 4%, partly reflecting a Bloomberg report citing AAPL is looking to revamp its entire Mac line-up with its next generation M4 processors (M3 launched late last year), in an effort, we believe, to offer on-device AI. We view this as a positive development as it could offer upside to pricing and revenue within Macs, as the M3 injected a minimal performance boost. We think the news also suggests that AAPL is poised to unveil a slew of AI tools to developers at its WWDC this June. In our view, AAPL is looking to generate higher revenue by injecting new on-device AI capabilities across iPhones and other higher-end devices to spur consumers to pay up this fall. Separately, AAPL is set to refresh its entire

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Alphabet’s Google Cloud to Invest $1 Billion in Digital Connectivity to Japan

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Alphabet’s (GOOG, GOOGL) Google Cloud said in a blog post that it will invest $1 billion in digital connectivity to Japan to support Google’s Japan Digitization Initiative and improve digital connectivity between the US, Japan and other Pacific Island territories. The investment will fund the expansion of Google’s Pacific Connect initiative, which covers Australia and French Polynesia, and the addition of two new subsea cables to establish new fiber-optic routes between the US and Japan, the company said. Google Cloud said it will collaborate with partners such as KDDI, ARTERIA, Citadel Pacific, and the Commonwealth of the Northern Mariana Islands on the planned subsea cables. No timeline was disclosed for the initiative.

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Apple Stock Has Slipped, but AI Looks Like a Catalyst, Says J.P. Morgan — Barrons.com

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Emily Dattilo Apple stock is having a rough year, but sentiment is beginning to improve, J.P. Morgan argued. Analysts led by Samik Chatterjee trimmed their December 2024 price target to $210 from $215 and reiterated an Overweight rating on shares of the iPhone maker in a Thursday research report. Fundamentals have been weighing on the stock, including slowing iPhone sales in China, and the company stepping back on its plans for a car, analysts explained. The new $210 price target is based on a multiple of about 29 times J.P. Morgan’s calendar 2025 earnings estimate, “but implies a more reasonable” 25 times multiple of the analysts’ fiscal 2026 earnings estimate, “which is more in line with the multiple the shares have traded at following the 5G [wireless] cycle momentum.” There are reasons to remain bullish on the shares, J.P. Morgan noted. First, the valuation premium is settling — with Apple

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Nvidia Offers Best Exposure to Artificial Intelligence, Morgan Stanley Says

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Nvidia (NVDA) is the best way to get exposure to artificial intelligence as visibility into strong spending continues to build, Morgan Stanley said in a research note. “Even given strong YTD appreciation, we make the case for maintaining outsized exposure to AI – and that, increasingly, Nvidia is the best way to get that exposure in our coverage,” Morgan Stanley analysts said. Demand is particularly strong among customers working to develop systems for artificial intelligence applications, they said. “Faced with limited slots for AI processors, we are seeing some of the appetite for alternatives taking a back seat to the highest ROI processor, which continues to be Nvidia,” the analysts said. Nvidia has also benefitted with its product execution and has been signaling it may keep would-be competitors at bay with aggressive pricing, the report said. Morgan Stanley reiterated its overweight rating on Nvidia while raising its price target to

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Google Parent Alphabet To Gain From Hardware Advances, Gemini Progress, Analyst Sees Rising Cloud Margins

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BofA Securities analyst Justin Post reiterated a Buy rating on Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL), with a price forecast of $173. Google kicked off its annual Cloud Next event with a keynote announcing new custom AI chips (Axion & TPUs), platform-wide Gemini integration, strategic partnerships, and customer traction. According to the analyst, Google’s hardware advances, Gemini progress, and AI-driven app demos should help sentiment on AI capabilities. Apart from this, Google’s hardware advances, Gemini progress, and AI-driven app demos should help sentiment on AI capabilities, the analyst adds. Post writes that the Cloud AI cycle could be underappreciated for the industry and a positive driver for Google stock given the growing scale & potential contributor to higher overall revenue growth. In addition, increasing cloud margins aiding EPS and growing stock valuation contribution on ’26 revenues can be positive drivers for Google stock. The analyst specifically highlighted the new custom Axion AI chip (CPUs) in

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ASML, ASM, VAT Group Stocks Look Undervalued

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Front-end semiconductor stocks–those focused on wafer fabrication–deserve to trade at a premium, Jefferies analysts write in a research note. The U.S. bank expects ASML Holding, ASM and VAT Group to see significant growth in the next 12 to 15 months driven by the structural growth outlook from rising capital-expenditure intensity, a lack of meaningful competition, strong cyclical drivers into 2025 and healthy cash returns. “While investors are concerned on the sharp rerating that has already occurred for many front-end semicap equipment names, we predict all three stocks to trade above the previous peak multiples and–for the reasoning above–expect further rerating to occur,” Jefferies says. ASML shares are up 1.8% at EUR915.30; VAT shares are up 0.1% at CHF484.70; ASM shares are up 2.1% at EUR588.0.

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Google Preparing New In-House AI Chip

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Alphabet’s Google is one of the most mentioned companies in the U.S. across all news items in the past 12 hours, according to Factiva data. Google is preparing a new AI chip called Axion, which is the type of chip commonly used in big data centers, and can handle everything from YouTube advertising to big data analysis. Axion adds to Google’s efforts to develop new computing resources, beginning with specialized chips used for AI work as it tries to deal with rising artificial-intelligence costs. Dow Jones & Co. owns Factiva.

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Most of the Magnificent Seven Look Set for Strong Earnings — Barrons.com

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The first quarter was a blockbuster for stocks. First-quarter earnings could notch a big win, too. The S&P 500 reached 22 record closes in the first quarter, putting it up more than 10% for the first three months of the year. That’s only the 11th time that the index has rallied more than 10% in the first quarter since 1950. Many of the same factors that propelled investor optimism, like encouraging economic data, is also fueling high expectations for corporate earnings, particularly for the highflying tech sector. Big banks kick off first-quarter earnings at the end of the week, and while there are likely to be some pockets of weakness, companies may be able to largely live up to investors’ hopes. Analysts are certainly upbeat about big tech. As DataTrek Research co-founder Jessica Rabe notes, all of the Magnificent Seven megacap tech companies except Apple and Tesla have seen consensus

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