Nvidia, Ralph Lauren See Ratings Boost Amid AI Focus

Key Takeaway

• Nvidia's price target raised to $1,150 by UBS due to high demand for its AI chip GB200, indicating a 31% upside.
• Ralph Lauren receives a buy rating from Jefferies with a $195 price target; Chegg downgraded due to AI tool competition.
• Oracle and Northern Data pivot towards AI investments, highlighting the market's growing focus on artificial intelligence technologies.

Nvidia's AI Chip Demand Surges

Nvidia, a leading tech giant known for its graphics processing units (GPUs), is experiencing a significant surge in demand, particularly for its new Blackwell chip, the GB200. UBS analysts have highlighted the strong demand for GB200 server racks, emphasizing the chip's potential to maximize performance in a given footprint. This demand is driven by the need for artificial intelligence (AI) trainings and inference at scale, with companies like Microsoft, Amazon, Alphabet, Meta, and Oracle expected to order large volumes of the GB200 chip in 2025. UBS has reiterated its buy rating for Nvidia and increased its price target to $1,150 from $1,100, indicating a 31% upside from Nvidia’s Monday close. Despite a slight premarket trading dip, Nvidia shares have soared 77% in 2024, thanks to the growing interest in AI technologies.

Ralph Lauren and Chegg: Diverging Paths

In the retail sector, Ralph Lauren is gaining momentum, particularly among younger consumers, according to Jefferies. The financial firm initiated shares of Ralph Lauren at a buy rating, with a price target of $195, suggesting a 17% rally potential. Analyst Ashley Helgans cited the company's successful portfolio elevation and expansion into high-growth categories like home goods, handbags, and outerwear as key drivers of margin expansion. Conversely, Chegg faces challenges due to the rise of AI-powered tools, with Jefferies downgrading the educational technology firm to an underperform rating. Analyst Brent Thrill expressed concerns over the sustainability of Chegg's paid subscription model in the face of free AI tools, leading to a lowered price target for Chegg stock to $4 from $7.

AI Investments Shape Market Trends

The broader market is witnessing a significant shift towards AI investments. Oracle and Northern Data are pivoting towards AI, with Oracle integrating generative AI into its cloud infrastructure and Northern Data shifting from bitcoin mining to AI cloud services. This strategic focus on AI is expected to drive future growth and position these companies as key players in their respective fields. The Spear Alpha ETF, which has gained 60% largely due to Nvidia investments, underscores the strong market appetite for AI-focused companies. Analysts remain bullish on the potential of companies like Oracle and Northern Data to capitalize on the AI revolution, with Dan Ives of Wedbush Securities and Berenberg initiating coverage on Northern Data with a Buy rating.

Street Views

• Brent Thrill, Jefferies (Bearish on Chegg):

  "With artificial intelligence-powered tools on the rise, Jefferies sees a difficult path ahead for Chegg... Looking ahead, we question the durability of CHGG’s paid subscription model in the new AI world where free AI tools have become a viable alternative to CHGG’s previous dominant positioning."

• Ashley Helgans, Jefferies (Bullish on Ralph Lauren):

  "Ralph Lauren is shaping up to be a quality growth stock... The company has been successful in elevating portfolio as witnessed by average unit retail gains of >70% the last several years... Emerging high-growth categories should continue to drive margin expansion."

• Timothy Acuri, UBS (Bullish on Nvidia):

  "Nvidia’s new chip means good things for its share prices in the next year... Our sense is that demand for GB200 server racks is very strong — to some extent being driven by rapidly increasing bottlenecks in power infrastructure components."