According to Melius Research, the underdogs in the artificial intelligence field, such as Apple, Advanced Micro Devices, and Intel, are expected to have a strong performance in the second half of this year. While major tech companies like Nvidia and Broadcom benefitted from the AI boom in the first six months, analyst Ben Reitzes predicts that the pace of investment in AI infrastructure will slow down in the coming months.
Reitzes suggests that this pullback does not indicate a burst in the AI bubble but rather presents an opportunity to shift focus towards other tech companies like AMD, Apple, and Intel. He believes that these companies have the potential to catch up and excel in the AI sector, especially those with lower expectations.
AMD, for example, has been making efforts to compete with Nvidia in the personal computer processor market, where Intel also plays a significant role. Reitzes views AMD as a promising investment due to its lowered AI accelerator expectations and lack of Intel’s surplus “foundry.” On the other hand, Intel, despite being less favored, could see a seasonal uptick in performance.
Reitzes has a Buy rating on both AMD and Intel, with a price target of $210 for AMD and $37 for Intel. In premarket trading, AMD was up 1.4% at $174.38, and Intel was up 3.5% at $33.13.
As for Apple, the company has seen steady growth since announcing its AI strategy. Reitzes anticipates further growth with the upcoming launch of the iPhone, which could potentially lead to a “supercycle” with smartphone revenue increasing by around 20% for up to two years.
Reitzes also has a Buy rating on Apple shares, with a $260 price target. Apple’s stock rose by 0.6% to $227.80 in premarket trading.
Overall, Melius Research’s prediction suggests that the second half of the year will bring opportunities for underdog companies like Apple, AMD, and Intel to shine in the AI sector. Investors may want to consider these companies as they have the potential for growth and advancement in the rapidly expanding artificial intelligence market.
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https://www.barrons.com/amp/articles/amd-apple-intel-ai-stocks-f0189384