Mobileye deserves place in AI portfolios, Morgan Stanley says
Mario Tama
Autonomous driving technology company Mobileye (NASDAQ:MBLY) has not seen the sharp run in shares that other artificial intelligence-linked stocks have in 2023, but investment firm Morgan Stanley believes the stock deserves a place in AI portfolios.
Analyst Adam Jonas, who resumed coverage on Mobileye (MBLY) with an equal-weight rating and per-share price target of $34, speculated the underperformance could be due to the "limited" free float, it being a well known story among investors or the "less promotional nature of the company."
"Either way, we would say MBLY does deserve a place in AI portfolios given their exposure to the AV theme and leadership in the vertical," Jonas wrote.
That issue aside, Jonas said there is likely to be a lot of investor attention on the company's SuperVision estimates when it reports second-quarter results on July 27.
"While we donât expect 2Q units to be a major needle-mover, forward commentary will be key to the narrative," Jonas wrote in an investor note. "As the sole SuperVision customer exited 1Q with inventory on hand, MBLY's 2Q SuperVision sales may have limited upside given the inventory backlog." 
A consensus of analysts expects Mobileye (MBLY) to earn 12 cents per share on $452.04M in revenue.
In addition, the uncertain situation in the electric vehicle sector, particularly in China, could impact Mobileye (MBLY) in the back half of the year, Jonas posited.
Concerning Tesla (TSLA), which has been speculated to license its full self-driving technology, Jonas said it's likely Tesla does indeed license the tech to other auto manufacturers, which could "further shrink" the addressable market for Mobileye (MBLY).
Jonas also noted the risks associated with additional competition from other semiconductor companies, companies working on their own solutions and potential geopolitical issues.
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