The Big Picture
The trading session opened with a flurry of analyst actions across the market. Among the notable rating changes, AMD received an upgrade, while Adobe, Travelers, and SailPoint were among the names hit with downgrades. Beyond these rating moves, a large slate of companies was also drawing attention on the earnings front. Much of the day's energy, however, was concentrated in the storage and memory space, where Wall Street showed renewed enthusiasm — a reminder that the day's market story was not solely dominated by the high-profile attention surrounding SpaceX.
Memory and Storage: Seagate and Western Digital
Memory and storage names have been strong performers, and they earned additional praise from Wall Street. JP Morgan Chase turned more bullish on two of the leading hard disk drive (HDD) makers, Seagate and Western Digital.
For Seagate, JP Morgan raised its price target all the way to $920, up from $775. For Western Digital, the firm lifted its target to $650, up from $530.
The driving rationale is improving pricing trends for hard disk drives. The firm sees stronger pricing in that market and believes it will translate directly into bigger profits and expanding margins. JP Morgan described the March quarter as marking an important milestone: it was the first time both major HDD makers reported year-over-year price increases at the same time. To the analysts, this suggests that supply-demand dynamics are improving after several difficult years for the storage industry.
Pricing is central to the outlook because it will determine the path forward from here. JP Morgan is expecting sequential price increases in the low- to mid-single-digit percentage range over the coming quarters. Critically, the firm believes that even a modest price increase will have an outsized impact on earnings growth.
Artificial intelligence is also a significant part of the story for these companies. While the AI narrative is often focused on the hardware itself — chip names like Nvidia — the view here is that Seagate and Western Digital are having a moment that should continue, positioning them well as longer-term winners in the "picks and shovels" element of the AI arms race. In response to the upgrades, shares of both Western Digital and Seagate moved higher by more than 1%.
The run for these names has been extraordinary. Seagate was up roughly 19% year-to-date, and over the trailing one-year period it had surged almost 600% — an incredible advance that, by all appearances, was showing no signs of quitting.
Qualcomm: A Higher Target, but a Cautious Stance
Qualcomm also received a price-target hike, though it did not lift the stock. Shares were slightly soft, off by about a third of a percent in morning trading. Coming into the session, the stock had been up roughly 18% year-to-date.
The attention came from Wells Fargo, which boosted its price target to $230, up from $160. However, the firm kept an equal-weight rating on the name, effectively positioning itself on the sidelines. In justifying the higher target, Wells Fargo cited potential upside from Qualcomm's emerging AI infrastructure opportunities, but it remained cautious on valuation — which explains the equal-weight rating.
Qualcomm's investor day is approaching, and the firm expects it will provide more clarity on the company's long-term growth strategy beyond smartphones. The smartphone business remains the foundation of Qualcomm, and that is precisely why some observers are lukewarm on the name: the company generates the majority of its profits from smartphones and from its wireless licensing chip technology. Key items to watch include updates on Android handset demand and Qualcomm's relationships with major customers. The company has been working to position itself as an AI beneficiary through its Snapdragon platform, which is one of the storylines to monitor.
Wells Fargo's valuation framework assigns potential value to Qualcomm's AI infrastructure business based on the gigawatts of AI data center capacity deployed. Specifically, the firm projects that 1 gigawatt of AI compute deployment could be worth more than $250 per Qualcomm share in valuation terms.
Qualcomm has long been touted as a name that would do well with AI, and over the past year it was up 28%. Yet there is some skepticism about the timeline. Investors appear to have been waiting a long time for the recent pop, which carried the stock up to $259. A look at the longer-term picture suggests the stock has spent the last three years essentially trading within a channel rather than breaking decisively higher.
Lennar: The Same Housing Story Continues
The homebuilder Lennar delivered results that underscored ongoing challenges in the housing market, with the CEO essentially reiterating that it is the same story as before — the industry is not yet out of the woods.
The quarter was mixed. Lennar missed expectations on the top line but beat on the bottom line. Adjusted earnings per share came in at $1.31, ahead of the $1.25 the street was looking for. Revenue, however, missed at $7.94 billion, against expectations of more than $8 billion.
The same challenges that have weighed on the broader housing market for some time were at play: elevated mortgage rates, tight inventory, and affordability pressures — the latter being especially relevant for Lennar — along with cautious consumers. Management added that geopolitical uncertainty and higher energy prices create another layer of pressure for prospective homebuyers. Overall, demand remains sluggish.
The company did manage to deliver more homes, with deliveries rising 2% year-over-year. But that growth came at a cost: the average selling price fell 5% to $371,000. In other words, Lennar is sacrificing pricing power. The company has been offering incentives to move demand and maintain sales volume in a difficult market.
There had been an expectation entering the year that the housing market would see some changes, but that has not yet come to pass. As a result, the revenue miss overshadowed the actual earnings beat.