Latest news with #BradSills
Yahoo
3 hours ago
- Business
- Yahoo
Bank of America is bullish on these 4 under-the-radar AI stocks
Bank of America sees additional AI investing opportunities in small and mid-cap stocks. AI mentions on earnings calls have increased, especially among Russell 2000 companies. The bank shared four buy-rated AI stock picks that go beyond the Magnificent Seven. The Magnificent Seven and the AI trade have become synonymous, but there are opportunities for investors to get exposure to the AI mega-trend outside of the biggest names in the market. Small and mid-cap companies are adopting AI technology to drive earnings growth, according to Bank of America analysts. As the AI trade progresses, the next wave of beneficiaries will be companies that adopt AI into their product offerings and revenue models. While AI infrastructure companies like Nvidia benefit from size and scale, more small-cap companies are participating in the next leg of the AI trade. Jill Carey Hall, equity and quant strategist at Bank of America, wrote in a recent report that earnings calls of Russell 2000 companies have mentioned AI more frequently over the last few quarters. Software companies are particularly well-positioned to take advantage of the nascent trend of agentic AI, or AI systems that operate autonomously with limited human supervision, according to the bank. Senior technology research analyst Brad Sills reported increased signs of "green shoots" in the development of agentic application adoption at the bank's Global Technology Conference earlier this month. Examples include increased database activity to handle running AI applications and more AI-focused code. Small-cap companies in particular present AI opportunity for active stock pickers. While the overall category has lagged behind its large-cap counterpart, the current backdrop allows investors to buy up promising high-growth companies at a discounted price. Additionally, Hall sees the potential for easing inflation and a pick-up in M&A transaction volume to provide a boost to small-cap technology valuations. Below are Bank of America's four top buy-rated small and mid-cap AI picks, along with their 12-month price targets and relevant analyst commentary. Datadog Ticker: DDOG Market cap: $42.1 billion Price target: $138 Company description: Datadog provides cloud-based tools that help tech teams monitor application performance and infrastructure in real time. BofA commentary: "We believe Datadog is a share gainer in the generative AI theme, as AI-native companies are already driving 8.5% of its annual recurring revenue (ARR). As more AI-native companies scale, and non-AI native organizations release their own AI experiences, we believe Datadog stands to benefit. We believe Datadog has the potential to deliver durable 20%+ revenue growth and attractive 20%+ free cash flow margins over the coming year." Seagate Technology Ticker: STX Market cap: $27.8 billion Price target: $135 Company description: Seagate designs and manufactures data storage products, including hard drives and SSDs, for consumer and enterprise use. BofA commentary: "Seagate's HAMR ramp has begun after announcing the 2nd & 3rd hyperscaler qualifications at the May 2025 Analyst Day (1st qual. was December 2024). The company has already achieved record margins coming out of the 2023 HDD downcycle and we believe the HAMR ramp in C2H25 will propel margins higher." Kyndryl Holdings Ticker: KD Market cap: $9.3 billion Price target: $44 Company description: Kyndryl, spun off from IBM, is an IT services company that provides infrastructure services including cloud, data center, and network modernization to enterprises around the world. BofA commentary: "We continue to view Artificial Intelligence (AI)/Generative AI (GenAI) as a net tailwind for the [IT services industry] … Recent large deal signings at attractive high-single-digit pre-tax-income margins provide incremental visibility into out-year earnings power." JFrog Ticker: FROG Market cap: $4.8 billion Price target: $48 Company description: JFrog offers a DevOps platform known for its artifact repository manager, Artifactory, which streamlines software development by enabling continuous integration and delivery across the software release lifecycle. BofA commentary: "Increasing binaries from AI-related packages (Docker, Hugging Face, Python, etc.) are driving increasing usage of the platform. We think that it should benefit from increased usage as generative AI likely catalyzes the pace of software development over the medium-term." Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
6 hours ago
- Business
- Yahoo
Bank of America is bullish on these 4 under-the-radar AI stocks
Bank of America sees additional AI investing opportunities in small and mid-cap stocks. AI mentions on earnings calls have increased, especially among Russell 2000 companies. The bank shared four buy-rated AI stock picks that go beyond the Magnificent Seven. The Magnificent Seven and the AI trade have become synonymous, but there are opportunities for investors to get exposure to the AI mega-trend outside of the biggest names in the market. Small and mid-cap companies are adopting AI technology to drive earnings growth, according to Bank of America analysts. As the AI trade progresses, the next wave of beneficiaries will be companies that adopt AI into their product offerings and revenue models. While AI infrastructure companies like Nvidia benefit from size and scale, more small-cap companies are participating in the next leg of the AI trade. Jill Carey Hall, equity and quant strategist at Bank of America, wrote in a recent report that earnings calls of Russell 2000 companies have mentioned AI more frequently over the last few quarters. Software companies are particularly well-positioned to take advantage of the nascent trend of agentic AI, or AI systems that operate autonomously with limited human supervision, according to the bank. Senior technology research analyst Brad Sills reported increased signs of "green shoots" in the development of agentic application adoption at the bank's Global Technology Conference earlier this month. Examples include increased database activity to handle running AI applications and more AI-focused code. Small-cap companies in particular present AI opportunity for active stock pickers. While the overall category has lagged behind its large-cap counterpart, the current backdrop allows investors to buy up promising high-growth companies at a discounted price. Additionally, Hall sees the potential for easing inflation and a pick-up in M&A transaction volume to provide a boost to small-cap technology valuations. Below are Bank of America's four top buy-rated small and mid-cap AI picks, along with their 12-month price targets and relevant analyst commentary. Datadog Ticker: DDOG Market cap: $42.1 billion Price target: $138 Company description: Datadog provides cloud-based tools that help tech teams monitor application performance and infrastructure in real time. BofA commentary: "We believe Datadog is a share gainer in the generative AI theme, as AI-native companies are already driving 8.5% of its annual recurring revenue (ARR). As more AI-native companies scale, and non-AI native organizations release their own AI experiences, we believe Datadog stands to benefit. We believe Datadog has the potential to deliver durable 20%+ revenue growth and attractive 20%+ free cash flow margins over the coming year." Seagate Technology Ticker: STX Market cap: $27.8 billion Price target: $135 Company description: Seagate designs and manufactures data storage products, including hard drives and SSDs, for consumer and enterprise use. BofA commentary: "Seagate's HAMR ramp has begun after announcing the 2nd & 3rd hyperscaler qualifications at the May 2025 Analyst Day (1st qual. was December 2024). The company has already achieved record margins coming out of the 2023 HDD downcycle and we believe the HAMR ramp in C2H25 will propel margins higher." Kyndryl Holdings Ticker: KD Market cap: $9.3 billion Price target: $44 Company description: Kyndryl, spun off from IBM, is an IT services company that provides infrastructure services including cloud, data center, and network modernization to enterprises around the world. BofA commentary: "We continue to view Artificial Intelligence (AI)/Generative AI (GenAI) as a net tailwind for the [IT services industry] … Recent large deal signings at attractive high-single-digit pre-tax-income margins provide incremental visibility into out-year earnings power." JFrog Ticker: FROG Market cap: $4.8 billion Price target: $48 Company description: JFrog offers a DevOps platform known for its artifact repository manager, Artifactory, which streamlines software development by enabling continuous integration and delivery across the software release lifecycle. BofA commentary: "Increasing binaries from AI-related packages (Docker, Hugging Face, Python, etc.) are driving increasing usage of the platform. We think that it should benefit from increased usage as generative AI likely catalyzes the pace of software development over the medium-term." Read the original article on Business Insider Sign in to access your portfolio
Business Insider
14 hours ago
- Business
- Business Insider
Bank of America is bullish on these 4 under-the-radar AI stocks
Bank of America sees additional AI investing opportunities in small and mid-cap stocks. AI mentions on earnings calls have increased, especially among Russell 2000 companies. The bank shared four buy-rated AI stock picks that go beyond the Magnificent Seven. The Magnificent Seven and the AI trade have become synonymous, but there are opportunities for investors to get exposure to the AI mega-trend outside of the biggest names in the market. Small and mid-cap companies are adopting AI technology to drive earnings growth, according to Bank of America analysts. As the AI trade progresses, the next wave of beneficiaries will be companies that adopt AI into their product offerings and revenue models. While AI infrastructure companies like Nvidia benefit from size and scale, more small-cap companies are participating in the next leg of the AI trade. Jill Carey Hall, equity and quant strategist at Bank of America, wrote in a recent report that earnings calls of Russell 2000 companies have mentioned AI more frequently over the last few quarters. Software companies are particularly well-positioned to take advantage of the nascent trend of agentic AI, or AI systems that operate autonomously with limited human supervision, according to the bank. Senior technology research analyst Brad Sills reported increased signs of "green shoots" in the development of agentic application adoption at the bank's Global Technology Conference earlier this month. Examples include increased database activity to handle running AI applications and more AI-focused code. Small-cap companies in particular present AI opportunity for active stock pickers. While the overall category has lagged behind its large-cap counterpart, the current backdrop allows investors to buy up promising high-growth companies at a discounted price. Additionally, Hall sees the potential for easing inflation and a pick-up in M&A transaction volume to provide a boost to small-cap technology valuations. Below are Bank of America's four top buy-rated small and mid-cap AI picks, along with their 12-month price targets and relevant analyst commentary.
Miami Herald
a day ago
- Business
- Miami Herald
Analysts revamp forecast for Nvidia-backed AI stock
I have a virtual private server with several services running on it. It has replacements for Google Drive, Whatsapp, and Github (or Gitlab). Getting a sufficiently good internet connection that would allow me to use a real (on-premise) machine instead of a virtual one is very difficult where I live. I've been maintaining this server without any (serious) problems for a couple of years. However, in the past few months, the situation has changed, for the worse. Nothing brings me more joy than an occasional email from my VPS provider telling me that my server's CPU usage has been averaging at 98% for the last 2 hours. My server, which was almost invisible for a very long time, has become a target of scrapers and scanners. Related: Popular AI stock inks 5G network deal I am not alone in having this issue. Many prominent open-source projects had to protect themselves, too, and recently they started using "Anubis" for this. (Not the malware with the same name) Why the sudden change, you might ask? Well, an increasing number of companies think they will be the ones to create this 'incredible artificial intelligence.' So, they are scraping any website, regardless of whether its data is relevant and reliable. The more data they can collect, the better, seems to be the prevailing modus operandi. And once they're done collecting, throw everything into the blender and hope for the best. What if you are a little startup, with the aforementioned goals of writing incredible AI, and you've done the previous step of collecting the data, and now you just need that blender? Perhaps you have some investor money, but can't build that blender yourself. After all, Graphics cards used for AI training cost an arm and a leg. This is where CoreWeave (CRWV) comes in. Just like the VPS providers that enable people like me who can't use real machines for their servers to use their servers instead, CoreWeave enables companies that can't afford AI servers to do their AI training on its GPU mega clusters. More AI Stocks: Wall Street veteran doubles down on PalantirAnalysts double price target of new AI stock backed by NvidiaOpenAI teams up with legendary Apple exec Considering that the company's business model is "renting" Nvidia (NVDA) graphics cards, it is not surprising that the company has become Nvidia's largest holding, making up more than 78% of Nvidia's disclosed portfolio. Related: Micron makes massive $200 billion AI bet CoreWeave released its earnings report for Q1 2025 on May 14th. Here are the highlights: Revenue of $981.6 million, a 420% increase loss of $314.6 million, a 143% increase EBITDA of $606.1 million, a 480% increase YoY. Guidance for the full year 2025 was: Revenue from $4.9 billion to $5.1 billionCapital expenditures of $20 billion to $23 billion Bank of America analysts, Brad Sills and Carly Liu, shared their opinions on the CoreWeave stock. "In our view, the AI infrastructure [capital expenditures] growth rate is peaking, though still very healthy (estimates are likely to move higher on a larger base), led by OpenAI. OpenAI's ChatGPT is the single largest consumer of AI workloads and is growing at a rapid pace. Therefore, we see solid sustained demand in CoreWeave's AI infrastructure market," said analysts In Q1, CoreWeave expanded its deal with OpenAI bringing the total contract value to $15.9 billion. The company also signed a new hyperscaler customer in Q1. It has also increased the average contract duration to four and a half years from four years since 2024. Related: Apple WWDC underwhelms fans in a crucial upgrade Analysts forecasted $21 billion of negative free cash flow for the company through calendar year 2027, driven by high capital expenditures. CoreWeave funds the majority of its capital expenditures with debt. The company managed to lower the interest rate in the recent debt raise of $2 billion to 9.3%, from 11% in calendar year 2024. "However, this remains a small % of the total incremental debt required from here, raising some questions, in our view," continued analysts. Sills and Liu noted that the stock is trading at twenty-five times its calendar year 2027 EBIT estimate, which is a premium to the peer group that is trading at sixteen times the estimate. They set the new price objective for CoreWeave, raising their target from $76 to $185, which is 29 times their calendar year 2027 EBIT estimate (vs. 16x previously), or 0.4 times adjusted for 69% growth. That said, they cut their rating on the stock after CoreWeave's recent rally, arguing there's less room for shares to head higher. "We believe much of the near-term upside has been priced in and downgrade our rating to neutral from buy," concluded analysts. Related: Amazon's latest big bet may flop The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.
Yahoo
2 days ago
- Business
- Yahoo
CoreWeave's Rally Pauses After BofA Cut
Bank of America cut CoreWeave (NASDAQ:CRWV) to Neutral from Buy, arguing the cloud specialist's valuation already reflects most upside even after boosting its price target to $185 from $76. Shares ticked up 1% in premarket trading as investors weighed BofA analyst Brad Sills's view that while CoreWeave has secured a new hyperscaler customer, expanded its OpenAI agreement and raised debt at attractive rates, it's trading at about 25 CY27e EBIT versus a 16 peer average. Warning! GuruFocus has detected 10 Warning Signs with CRWV. Sills flagged that high capex will drive roughly $21 billion of negative free cash flow through 2027with capex set to hit $46.1 billion and 85% of it debt-fundedmaking continued access to reasonably priced financing critical for execution. BofA's more conservative stance follows CoreWeave's rapid infrastructure build-out to meet surging AI demand, and underscores the tension between growth investing and stretched multiples. Why it matters: If CoreWeave can't convert its elevated capex into sustained cash flow growth, its premium valuation could unwind sharply. Investors will be watching upcoming results in for capex guidance and any signs of cash-flow improvement. This article first appeared on GuruFocus. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
