Seeking Alpha analysts downgraded two high-flying technology companies, Shopify (NASDAQ:SHOP) and Broadcom (NASDAQ:AVGO), citing concerns about overvaluation and potential market corrections after significant rallies.
Conversely, analysts have upgraded Taiwan Semiconductor Manufacturing Company (NYSE:TSM) and Allstate Corporation (NYSE:ALL), pointing to strong fundamentals that outweigh perceived risks and create buying opportunities for investors.
Upgrades
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM): Upgrade to Buy by Oliver Rodzianko. Despite geopolitical tensions between China and Taiwan, the analyst cites TSMC’s global expansion, technological dominance, and the unlikelihood of a Chinese invasion as reasons for confidence.
- “Given that the TSMC invasion is largely an illusion, or a Chinese feint that in reality is a clear geopolitical stalemate, not investing in TSMC because of geopolitical issues is misguided. Moreover, even the gray-zone tactics are only temporary delays, so it is literally business as usual for TSMC shareholders… There is no reason to be fearful here—the right move is to negate fear, study the facts, and move forward confidently.”
The Allstate Corporation (NYSE:ALL): Upgrade to Buy by Seeking Profits. The analyst highlights the insurance company’s strategic refocus on personal lines, divestiture of non-core assets, and improved underwriting profitability despite slowing premium inflation.
- “With stronger investment returns, a better Q2, and a much-lighter-than-feared cat environment, I see Allstate earning at least $21 this year, with the run rate potentially closer to $20, given lower interest rates over time… with Allstate making further progress and the underwriting environment not deteriorating as much as some feared, in my view, I see shares moving towards 12x or ~$230-$240 as fair value as investors grow more comfortable with the sustainability of underwriting results.”
Downgrades
Shopify Inc. (NASDAQ:SHOP): Downgrade to Hold by Juxtaposed Ideas. While acknowledging Shopify’s growing market share and improving metrics, the analyst warns that the stock has reached peak valuation with a potential double-digit correction likely.
- “Based on SHOP’s established three upward support lines, we believe that the stock has peaked here with a steep pullback to the middle/lower support lines likely, based on the historical trends observed in Q1’23, Q3’23, Q2’24, and Q1’25… With historical trends implying a painful -21.6% correction to the middle support line/100-day moving averages of $115s or, worst, -35.2% to the lower support line of $95s, we do not recommend anyone to chase the SHOP stock over the cliff.”
Broadcom Inc. (NASDAQ:AVGO): Downgrade to Hold by Juxtaposed Ideas. Despite excitement around Broadcom’s custom AI accelerator prospects and growing hyperscaler partnerships, the analyst believes the stock has become significantly overvalued after its 34% rally.
- “While we are highly encouraged that its robust custom AI accelerator prospects are finally taken seriously and consequently, the materialization of bullish support, we believe that the stock is likely to peak soon and return part of its recent gains similar to historical trends discussed above. Combined with the potentially painful pullback by -22% to the 100 day moving averages of $260s, if not more, we prefer to downgrade the AVGO stock to a Hold here.”