SUPERNEWS

Equities

Morgan Stanley Sees eBay +25% on AI, Sets $62 Target

Morgan Stanley upgrades eBay to 'overweight' with a $62 target, citing AI potential, amidst broader positive market outlooks.

By Alex P. Chase

ᐧ

4/18, 08:19 EDT
Amazon.com, Inc.
ConocoPhillips
eBay Inc.
Goldman Sachs Group, Inc.
Morgan Stanley
NVIDIA Corporation
article-main-img

Key Takeaway

  • Morgan Stanley upgrades eBay to overweight, projecting a 25% stock increase within a year due to AI strategy, setting a new price target of $62.
  • Nvidia and Amazon expected to outperform in earnings season, with Nvidia's stock up 70% in anticipation of AI demand-driven fiscal Q1 earnings.
  • Global market insights highlight potential gains in Asia-Pacific "alpha" stocks and undervalued European tech, alongside banking sector growth driven by investment-grade debt issuance and AI financing.

AI and Market Dynamics

eBay Inc. has seen a notable shift in market perception, with Morgan Stanley's analyst Nathan Feather upgrading the stock to overweight from a previous underweight rating. This change is attributed to eBay's strategic positioning to leverage generative AI, with Feather projecting a 25% increase in the stock's value over the next year. His new price target of $62, up from $35, positions him as the most optimistic analyst regarding eBay's stock, as per Bloomberg data. This optimism comes in the wake of eBay's 13% stock increase this year, spurred by job cuts aimed at reviving profits amidst economic challenges. Morgan Stanley's positive outlook on eBay's "strategy evolution" and AI focus marks a significant turnaround from Feather's initial coverage in February.

Earnings Season Outlook

As the earnings season progresses, Morgan Stanley has highlighted several stocks, including Amazon and Nvidia, expected to show strong performance. Equity strategist Michelle Weaver anticipates a first-quarter earnings bottom with a recovery in the second quarter, leading to expansion later in the year. Nvidia's stock has surged by 70% in 2024, with high expectations for its fiscal first-quarter earnings due to sustained AI demand. Amazon is also predicted to exceed profit estimates through cost reduction efforts. These forecasts reflect Morgan Stanley's broader market analysis, suggesting a positive trajectory for these companies.

Global Market Insights

The global market presents a mixed performance, with notable gains in Japan's Nikkei 225 and India's Nifty 50, contrasted by declines in China's CSI 300 index. Morgan Stanley's focus on "alpha" stocks from the Asia-Pacific region, excluding Japan, highlights potential market leaders like South Korea's Hana Financial Group and Taiwan's Novatek Microelectronics. Additionally, Morgan Stanley identifies undervalued tech stocks in Europe, such as CompuGroup, Exclusive Networks, and W.A.G. Payment Solutions, suggesting potential for significant market gains in these regions.

Banking Sector Adjustments

The banking sector is experiencing a resurgence in capital markets, with Goldman Sachs and Morgan Stanley seeing their shares increase by 3% and 2.5%, respectively. This growth is driven by near-record levels of investment-grade debt issuance. Goldman Sachs CEO David Solomon has identified AI financing as a new frontier for investment banks, highlighting the vast financing needs for AI infrastructure. Meanwhile, Morgan Stanley plans to reduce its Asia-Pacific banking workforce by 13% in response to economic challenges, reflecting broader sector adjustments amidst regulatory and market pressures.

Street Views

  • Nathan Feather, Morgan Stanley (Bullish on eBay):

    "We believe eBay is best-positioned to capture upside from generative AI in 2024."