UBS assigns SK Hynix a "Buy" rating with a $204 price target

UBS initiated coverage of SK Hynix's American Depositary Receipts (ADRs) with a "Buy" rating and a $204 price target, believing the market is undervaluing the structurally superior returns of the memory sector.

Analyst Nicolas Gaudois noted that the ADRs are down 33% from their peak on July 14 and 13% below their $149 offering price on Thursday, and now represent a long-term return on equity close to the AI ​​average of 17.7%, compared to UBS's own estimate of 40.2% for 2027-2031. According to him, the memory industry has "changed dramatically": agent-based AI is expected to drive memory demand through 2027. DRAM demand growth is expected to accelerate to 36% year-on-year in 2027 from 22% in 2026, while NAND demand is expected to grow to 23% from 20%.

Commenting on the second-quarter results, UBS emphasized that revised long-term agreements are being concluded "faster than expected": 10 have already been signed, with several more under negotiation. While this may limit short-term price upside, Godua believes the agreements will have a positive impact on margins in the long term. DRAM average selling prices increased 30% quarter-on-quarter, but were constrained by a higher share of the mobile segment and the start of HBM4 shipments only at the end of the period.

According to Godua, at current levels, the stock does not fully reflect higher profitability, stronger free cash flow generation, and improved shareholder returns.

Capital Economics Expects AI Rally to Resume, but Warns of Dangers in 2027

Capital Economics told clients that the recent sell-off in AI-related tech stocks is driven by fear, not data, and expects the rally to resume—at least in the near term.

Chief Economic Advisor John Higgins identified several sources of pressure. One is the prospect of increased memory chip supply from Chinese giants, particularly CXMT, which went public on Monday. While this may not impact the supply of high-bandwidth memory targeted at AI, Higgins noted that it could alleviate the shortage of standard memory chips and, if prices decline, undermine revenues for major American and Korean memory makers.

Another cause for concern is China's progress in the AI ​​arms race. News of China's development of deep ultraviolet lithography machines hurt ASML shares, despite the Dutch company's extreme ultraviolet lithography machines being significantly more advanced. Chinese labs training advanced models at lower costs have also cast doubt on the ability of American hyperscalers to monetize their investments.

Furthermore, reports that Nvidia may provide approximately $250 billion in financial guarantees to OpenAI have reignited concerns about "circular financing" in AI development.

Despite headwinds, Capital Economics still expects the "AI train" to return to the rails, maintaining its S&P 500 forecast for the end of 2026 at 8,250.

However, in the long term, the company believes its "overwhelmingly optimistic" earnings expectations will be revised downward, forecasting the index to fall to 6,500 by the end of 2027.

Bernstein Remains Bullish on Memory Stocks Following $700 Billion Partnerships

Bernstein reiterated its bullish stance on memory chip makers following a wave of multi-billion-dollar partnerships announced at the South Korean government's AI Summit in San Francisco, where Samsung, SK Hynix, Nvidia, and Broadcom unveiled new agreements in memory, contract manufacturing, and AI data centers.

SK Hynix and Nvidia signed letters of intent covering a partnership worth over $500 billion, including memory supplies and a planned 2 GW Vera Rubin DSX AI fab for SK Telecom scheduled for 2027. Analysts led by Mark Lee noted that the memory partnership includes "long-term technical development and stable supply of next-generation AI memory" designed to help SK Hynix "broaden its growth foundation." SK Group is also reported to intend to execute additional memory supply agreements worth $250 billion over the next five years.

Separately, Samsung and Broadcom signed a $200 billion memorandum of understanding covering memory supplies, including HBM, and contract manufacturing services through 2030, with a focus on 2nm and below technologies, as well as advanced packaging.

Analysts noted that the announcements confirm the growing role of memory in AI infrastructure. "We believe the announced amounts are largely memory-related and demonstrate the need for NVIDIA and Broadcom to secure memory supplies," they wrote, pointing to consensus forecasts for annual memory revenue of approximately $1.3 trillion in both 2027 and 2028.

The team stated that it remains constructive on the memory sector and views the recent decline as a "good entry point," arguing that memory is more important for AI than logic semiconductors. Analysts pointed to a long-term competitive threat from China in the NAND segment, maintaining an "Underperform" rating on Kioxia, but noted that this risk is significantly less in the DRAM segment, where China will likely struggle to compete without access to EUV lithography.

TD Cowen Downgrades Intuit to "Hold," Seeing Negative Catalysts Through Mid-2027

Earlier this week, TD Cowen downgraded Intuit from "Buy" to "Hold," with analyst Jared Levin citing a preponderance of negative near-term catalysts that will weigh on the stock "at least until 3Q27 results are released in May."

Levin cited a challenging environment ahead of the upcoming fourth-quarter earnings call, the lack of significant announcements at the September investor day, and ongoing pressures related to perceived AI risks and intensifying competition. For its fourth-quarter earnings report, expected in August, Levine predicts Intuit will provide fiscal 2027 revenue guidance below consensus and its own long-term guidance of 10%+, and will lower its long-term growth targets for its Global Business Solutions and TurboTax divisions.

While the analyst doesn't fully subscribe to the "existential bearish thesis on AI threat to the stock," he sees significant execution risk associated with Intuit's AI product strategy and increased competition in the self-service tax preparation segment from free solutions, creating uncertainty about the sustainability of double-digit revenue growth. TD Cowen lowered its price target to $304 from $504, based on a 10x calendar 2027 earnings multiple, and lowered its revenue estimates for fiscal 2027 and 2028 by 1.3% and 2.2%, respectively, below the market consensus. The company cited sustained outflows from AI trading as the main risk to its neutral stance.

Analysts Downgrade Fiverr as AI Pressure Accelerates on Core Business

In another significant downgrade, Oppenheimer lowered its rating on Fiverr from Outperform to Neutral, while Goldman Sachs also downgraded it from Buy to Neutral after the company sharply cut its full-year guidance amid mounting pressure from AI.

Oppenheimer analyst Jason Helfstein noted that pressure from the implementation of large language models "intensified significantly during the quarter," forcing Fiverr to lower its full-year revenue and EBITDA guidance by 9% and 21%, respectively. Revenue for the second quarter fell 10% year-over-year, worse than the 2% decline in the first quarter, and the number of buyers declined 22% over the past twelve months. Despite the company's expansion into higher-value-added services, Oppenheimer noted that low-value services account for 85% of GMV and "headwinds are strengthening." The brokerage now forecasts revenue declines of 16% and 38% for 2026 and 2027, respectively, citing "low confidence" in its model, while management expects the turnaround to take another six quarters.

Oppenheimer added that it will likely wait for revenue to stabilize, despite the shares trading near cash levels with an enterprise value of just $28 million.

In a separate note, Goldman analyst Eric Sheridan pointed to "competing trends" in the freelance economy—a contraction of high-volume, low-value work alongside a shift toward higher-value AI-enabled projects—and lowered his price target to $13 from $26.

The number of active buyers fell 22% year-over-year, while spending per buyer increased 16%. Goldman said it needed clarity on the "ultimate growth rate, normalized growth, and normalized margin structure following industry transformation" before taking a more positive stance, though it still believes Fiverr is positively positioned to the long-term structural growth of the gig economy.