Key insights
- JPM upgraded ams-Osram due to AI photonics and smart glasses prospects, forecasting significant revenue growth by 2030. This reflects positively on the broader AI and semiconductor sectors, particularly companies involved in Micro LED technology like Microsoft and Marvell. The upgrade suggests increased investor confidence in AI-related hardware, potentially boosting sentiment for US-listed companies in similar fields.
Investing.com -- J.P. Morgan upgraded ams-Osram to “overweight” from “neutral” on Tuesday and more than doubled its December 2027 price target to CHF23.60 from CHF11.80, citing stronger prospects in AI photonics, smart glasses and an improving semiconductor business.
Shares in the Swiss semiconductor and lighting group have surged 54% over the past month and closed at CHF18.92 on May 18. The stock is up 141% year to date, outperforming European peers including Infineon Technologies and STMicroelectronics.
Analysts led by Craig McDowell said the bank now directly incorporates AI photonics into forecasts, reflecting what it called a “more credible” Micro LED optical engine opportunity.
J.P. Morgan’s base case assumes ams-Osram secures about 25% market share in a segment where 18% of scale-up co-packaged optics and 10% of optical transceivers adopt Micro LED technology by 2030. That would generate roughly €192 million in AI photonics revenue by the end of the decade.
“The use of Micro LED as the optical engine is increasingly credible with multiple hyperscalers and ecosystem players exploring its application,” the note said, citing Microsoft and Marvell Technology.
The bank also forecast smart glasses revenue exceeding €100 million on an annualised basis from 2027 onward.
J.P. Morgan raised its revenue forecasts by 1% for 2026 to €3.23 billion, by 3% for 2027 to €3.35 billion and by 3% for 2028 to €3.55 billion. It increased adjusted EBITDA estimates by 5% for 2026 to €538 million, 11% for 2027 to €594 million and 12% for 2028 to €664 million.
Adjusted earnings per share forecasts improved to a loss of €0.19 for 2026 from a prior loss of €0.37, while 2027 EPS was revised to a profit of €0.35 from a previous loss estimate of €0.12.
The valuation is based on 2028 adjusted EBIT of €354 million, applying a 13-times multiple, which J.P. Morgan said represented a roughly 15% discount to the European peer group median.
The bank said refinancing higher-cost debt could cut annual interest expenses by €80 million to €100 million if ams-Osram achieves investment-grade borrowing costs.
J.P. Morgan highlighted risks including slower adoption of Micro LED technology in data centres, weaker smart glasses demand, competitive pressure in automotive markets and continued restructuring-related cash flow strain.