Top 5 Analyst AI Trends: Nvidia Stock "May Outperform the Market in the Second Half of 2026"

Investing.com - Here are the most important analyst movements in the artificial intelligence (AI) sector this week.

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Citigroup recommends buying Nvidia stock before strong performance in the second half of the year

Citigroup urges investors to increase their holdings in Nvidia (NASDAQ:NVDA) before the stock is expected to outperform the market in the second half of 2026, citing strong product momentum and improved demand visibility in 2027.

Analyst Atif Malik stated in a preview report that the company expects Nvidia to report $67 billion in revenue for the January quarter, “above the market expectation of $65.6 billion,” and to set a sales guidance of $73 billion for the April quarter, compared to the market consensus of $71.6 billion.

This bullish view partly stems from the company’s product cycle. Malik expects the continued rollout of the B300 and Rubin platforms to drive sequential sales acceleration of 34% in the second half of 2026, up from 27% in the first half.

He noted, “Most investors’ focus has shifted beyond the earnings report itself” to Nvidia’s annual GTC conference in mid-March, where the company is expected to detail its inference roadmap using Groq low-latency SRAM IP and provide “early outlooks for AI sales in 2026/27.”

On profitability, the analyst forecasts a gross margin of about 75% for fiscal 2027, assuming operating expenses grow by over 30%, roughly in line with the trend in fiscal 2026.

Regarding concerns about excessive capital expenditure by hyperscale cloud providers, the analyst said that as AI infrastructure demand continues to drive cloud revenue growth, these investments “will yield long-term returns.”

He also acknowledged increasing competition in inference but expects Nvidia to “maintain its leadership in training and inference-focused inference workloads.”

Citigroup maintains a buy rating and a target price of $270, concluding that the stock “looks attractive, and with demand visibility extending to 2027, it could outperform the market in the second half of 2026.”

Morgan Stanley views Amazon as an undervalued winner in GenAI

Morgan Stanley has named Amazon (NASDAQ:AMZN) as its top pick, believing that AWS and retail remain undervalued beneficiaries of the GenAI wave, enabling the company to lead and capitalize on the next phase of AI-driven disruption.

Despite ongoing debates among investors about the returns on large AI capital expenditures, analyst Brian Nowak remains bullish amid “this uncertainty,” highlighting two potential catalysts that could lead to a reevaluation of the stock.

The first catalyst focuses on the durability of AWS growth. Nowak states that demand trends remain strong, with backlog levels supporting “significant growth of over 30% for quite some time.” However, he notes that the pace is currently constrained by data center capacity ramp-up.

He uses “capital expenditure return analysis” to evaluate AI returns, measuring incremental revenue relative to capital spending from the previous year. In his base case, implied returns are about 50% below the long-term average, suggesting that as data centers come online and catch up with investments, AWS revenue has upside potential.

Nowak estimates that a 5% increase in returns could add approximately 130 basis points to AWS growth, and reaching about $0.45 could push AWS year-over-year growth above 30%.

“As AWS opens more data centers, this ‘return rate’ should improve, and AWS should continue to accelerate,” he wrote.

The second catalyst is proxy commerce. According to Nowak, Amazon’s expanding last-mile inventory, growing infrastructure, and ongoing technological investments position the company as a leader in vertical and horizontal proxy shopping.

He pointed out that the company’s platform-exclusive proxy Rufus contributed about 140 basis points to the GMV growth in Q4 2025.

Amazon also recognizes the need to “jointly find better customer experiences” with horizontal AI proxies and states that “we continue to have multiple dialogues,” indicating potential future partnerships.

“We look forward to the emergence of Amazon’s proxy partnerships, which will give investors more confidence in Amazon’s long-term positioning,” Nowak wrote.

Evercore adds Dell Technologies to tactical outperform list ahead of earnings

Evercore has added Dell Technologies (NYSE:DELL) to its tactical outperform list ahead of next week’s January quarter earnings, expecting the hardware manufacturer to surpass current revenue and profit forecasts.

The firm expects Dell to beat the consensus revenue of $31.4 billion and EPS of $3.52, driven by “strong recent demand trends in traditional hardware (PCs/servers) and AI computing.”

Evercore also highlighted recent favorable developments in memory pricing. As concerns over rising memory costs grow, the firm believes Dell benefits from early demand for PCs and traditional servers, as customers seek to purchase before ASPs increase.

Within the Infrastructure Solutions Group, demand for AI servers remains a core story. Dell’s AI orders at the end of Q3 totaled $12.3 billion, with backlog at $18.4 billion, and guidance for FY2026 AI server revenue at $25 billion. Evercore suggests this implies AI revenue in the January quarter could jump to over $9 billion.

On the client side, early IDC data shows Dell gained about 100 basis points of market share in Q4, marking its first share increase in over three years.

However, Evercore expects some near-term margin pressure. The current consensus points to gross margin declining about 90 basis points sequentially to 20.2%, and down 410 basis points year-over-year, partly due to early memory pressures.

Nevertheless, the firm notes that “Dell has shifted to more dynamic pricing actions and shorter quoting windows to better protect future margins.”

Looking further ahead, Evercore expects management to outline a path into FY2027 of at least high-single-digit revenue growth and 10-15% EPS growth, supported by expanding gross profits, operating leverage, and share repurchases.

Particularly in AI servers, the firm forecasts “significant jumps with Rubin’s progress,” potentially supporting revenues of $35-40 billion while maintaining stable mid-single-digit profit margins.

Evercore maintains its outperform rating on the stock but lowers its target price to $160.

Needham raises Ardent based on improving demand trends

Needham & Company on Thursday upgraded Analog Devices (NASDAQ:ADI) from Hold to Buy, citing strengthening operating trends, solid recent performance, and improving key end-market demand, which are expected to continue supporting earnings and stock price.

Analyst N. Quinn Bolton said that after the company’s Q1 results exceeded expectations and guidance “significantly above expectations,” the firm “can no longer remain on the sidelines.”

Despite the stock’s recent strong performance—up over 40% since the FY2025 Q4 report, compared to a 2.6% rise in the S&P 500—Needham sees further upside.

The firm set a $400 target price, based on a 30x P/E multiple of its FY2027 earnings estimates.

Bolton noted that customer dynamics seem to be improving, with “customers appearing to have moved past the digestion phase,” and order patterns now more aligned with basic consumer demand.

He also highlighted the recovery potential in the company’s core industrial segment. Excluding automation testing equipment and aerospace & defense, this business remains “20% below previous peaks,” indicating significant room for improvement as orders strengthen.

The analyst further emphasized that inventory dynamics could be a positive factor, believing that “restocking cycles are still ahead for the company.” He added that improved pricing and increasing exposure to data center and AI applications—currently about 20% of sales—should continue to support growth prospects.

Truist upgrades Shopify to Buy based on AI-driven pullback opportunity

In another upgrade this week, Truist Securities on Tuesday upgraded Shopify (NASDAQ:SHOP) from Hold to Buy, raising its target price from $110 to $150, viewing recent software sell-offs related to AI concerns as an attractive entry point for long-term investors.

“Software valuations associated with AI panic have sharply declined, creating an attractive buying opportunity for long-term Shopify investors,” analyst Terry Tillman said in a report.

He added, “Shopify is one of the few recent software companies showing strong accelerated growth,” and believes multiple long-term drivers—including international expansion, payments, enterprise appeal, B2B, and “proxy commerce now being one of the best profit growth profiles for scaled software and proxy AI.”

Regarding investor concerns about AI disruption and the so-called “ambient coding,” Tillman said the risks seem exaggerated. Ambient coding refers to AI-driven, prompt-based, no-code tools that rapidly build applications with limited traditional programming.

Instead, the analyst emphasized Shopify’s scale, security, and performance advantages. He highlighted the platform’s ability to handle peak demand, including $5.1 million in sales per minute on Black Friday and 148,000 billion database queries during Cyber Week.

Tillman stated he “does not believe Shopify will be affected by ambient coding from prompt engineering/no-code AI startups, nor will it impact its growth algorithms in the foreseeable future.”

Payments remain another key pillar of the bullish case. Tillman pointed out Shopify’s “market-leading” checkout experience and its long-term investments in fintech capabilities.

Total payments processed in Q4 reached $84 billion, with penetration expanding to 68% of gross merchandise volume. Shop Pay now handles over half of total US payments, and Shopify Payments is available in more than 20 countries.

Looking ahead, Tillman outlined five reasons the company is well prepared for the rise of proxy commerce, including its global merchant network, deep commerce data, record system roles, protocol development work (such as universal commerce protocols), and its position as a trusted brand operating system.

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