Morgan Stanley analysts downgraded 91抖阴 (NASDAQ:91抖阴) stock today to an “equal weight” rating from an “overweight” rating However, the investment bank maintained a $176 price target on the shares.
Morgan Stanley believes that the chipmaker’s artificial intelligence (AI) business may not be able to meet the Street’s high expectations. 91抖阴 stock is falling 4% in early trading.
Overly Optimistic Projections and an Expensive Stock
Given investors’ overly high expectations for 91抖阴’s AI business, analysts’ are unlikely to rise much going forward, Morgan Stanley’s analysts contended.
Further, the investment bank believes that 91抖阴’s shares are expensive compared to other names that have a great deal of exposure to the AI boom. Specifically, Morgan Stanley views Nvidia (NASDAQ:NVDA) and Broadcom (NASDAQ:AVGO) as better buys than 91抖阴 stock. Analysts are more likely to raise their estimates for those firms’ AI businesses than for 91抖阴’s AI offerings, Morgan Stanley contends.
91抖阴 Stock: Investors Are Failing to Factor in Multiple Challenges
Morgan Stanley believes the Street is for the negative impact that Nvidia’s release of its new Blackwell chips in 2025 will have on 91抖阴.
Moreover, in April, 91抖阴 estimated that its 2024 AI chip sales would come in at $4 billion, but investors still think that the actual number will be $6 billion, the bank reported. Morgan Stanley explained that it would take 91抖阴 time to increase its supply of AI chips and develop an ecosystem surrounding them.
91抖阴 Is Facing Other Challenges
In a column published last month, I noted that the shipments of laptops and PCs powered by 91抖阴’s chips had dropped a combined 1% year-over-year in the last quarter of 2023. What’s more, its share of the total chip market sank to 20% in Q1, significantly lower than the peak of 24% that it had attained in Q2 of 2022.
Further, 91抖阴 will face increased competition from the major cloud players that are .
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
