Ulta Beauty (ULTA) – OUTPERFORM, $475.00 Price Target
Adding Back to Top Pick Status and Consumer Conference Insights
Ulta Beauty has regained its status as a top pick according to Oppenheimer analysts, with a reaffirmed OUTPERFORM rating and a $475 price target. The company refrains from commenting on business trends intra-quarter, but there are several promising indicators. Firstly, the beauty category remains healthy with high levels of innovation. Ulta is pleased with recent brand launches and is optimistic about its innovation pipeline for the second half of the year. The company is also focusing on sales and traffic-driving initiatives to defend its strong market share amidst current competitive dynamics. Furthermore, management is very satisfied with its partnership with Target (TGT). These factors combined suggest a robust outlook for Ulta Beauty.
NVIDIA (NVDA) – OUTPERFORM, $150.00 Price Target
Continued Optimism on Data Center AI and New Product Launches
NVIDIA’s management expressed a bullish outlook, particularly on data center AI and the upcoming GB200 NVL36/72. The company is ramping up the H200 into the second half of the year, with significant contributions from the B100 expected in the fourth quarter. The performance advantage of the liquid-cooled, full-rack GB200-based NVL36 and NVL72, offering 30-35 times inference performance compared to Hopper, is notable. NVIDIA has been preparing its supply chain, targeting the largest cloud service providers as initial customers. The complexity of AI queries determines compute intensity rather than user numbers, necessitating more GPUs for more complex tasks. Overall, NVIDIA’s data center sales are split 60/40 between training and inference and 45/55 between cloud service providers and others.
AppLovin (APP) – OUTPERFORM, $97.00 Price Target
Navigating Apple’s Ad Attribution Framework Changes
AppLovin’s stock has seen a recent decline, attributed to concerns over Apple’s new ad attribution framework introduced at WWDC. However, Oppenheimer analysts believe that Apple’s AdAttributionKit, essentially a rebranding of SKAN, will have a neutral impact on AppLovin’s Software Platform business. The company’s platform remains healthy, and recent releases from major mobile game developers like Supercell and Zynga are expected to boost user acquisition spending. Despite the recent pullback, the outlook for AppLovin remains positive, with an OUTPERFORM rating reiterated.
Zscaler (ZS) – OUTPERFORM, $260.00 Price Target
Strengthening Position in Zero Trust Security
Zscaler’s position as a leading “zero trust” security service provider has been reinforced following its Zenith Live event. The company announced expanded capabilities in data protection and branch office/IoT/OT network segmentation, raising its serviceable addressable market (SAM) to $96 billion. Changes in the go-to-market strategy towards account-centric selling and expanding global system integrator partnerships are expected to drive greater product cross-sell. With these initiatives, Zscaler aims to consolidate the fragmented data security and IoT/OT security markets. The outlook remains positive with an OUTPERFORM rating.
Advanced Micro Devices (AMD) – PERFORM
Outlook on Data Center CPU/GPU Product Line
AMD’s management has a constructive outlook on its data center CPU/GPU product line. Supply constraints in the first half are expected to ease in the second half. AMD is adopting NVIDIA’s annual accelerator refresh cadence, with the MI325X available in Q4 2024, MI350X in 2025, and MI400X arriving in 2026. The MI325X offers improved inference workloads with 288GB of HBM3E memory. Transitioning from CDNA3 to CDNA4 architecture, the MI350X is expected to deliver a 35 times performance improvement in inference. AMD aims to benefit from customers seeking alternatives to NVIDIA’s CUDA software. With a TAM estimated at $400 billion for AI accelerators, AMD’s Instinct accelerators have been the fastest to reach $1 billion in sales. However, investor expectations for MI300 revenue this year have been adjusted from $8 billion to around $5 billion. The official outlook for the year remains at $4 billion, primarily for inference tasks.\
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