JPMorgan upgraded shares of ams-Osram (SIX:AMS) to Neutral from Underweight on Friday and increased its 12-month price target to CHF 11.80 from CHF 5.45. The firm said the change reflects a growing Micro LED opportunity linked to artificial intelligence data centers that appears to be arriving earlier and at a larger scale than previously anticipated.
The bank's reassessment followed ams-Osram's first-quarter results, which signalled a shift in timing for the Micro LED data center use case. Company commentary moved from a "2030+" timeline to saying the opportunity would arrive "definitely before 2030," and management also disclosed a development partnership with an unnamed industry player. JPMorgan added that Microsoft is exploring the technology's use.
As a result of the updated view on timing and scale, JPMorgan lifted its top-line projections, increasing revenue forecasts by 3% for 2026 to 3,185 million and by 4% for 2027 to 3,249 million. Adjusted EBITDA estimates were also raised by 5% for 2026 to 515 million and by 6% for 2027 to 536 million.
The forecast revisions reflect expected improvements across ams-Osram's Opto Semiconductors and Lamps & Systems divisions. JPMorgan noted that the company's core business shows signs of recovery in the automotive and industrial segments, and judged market share gains from Lumileds and First Brands to be credible.
On the Lamps & Systems side, JPMorgan estimated organic growth in the first quarter at a high single-digit percentage. That gain contributed to the bank's more constructive outlook for the group's near-term performance.
At the same time, JPMorgan cautioned about ams-Osram's consumer exposure. The firm highlighted smartphone-related revenue of approximately 600-700 million, which it said represents roughly 20% of group revenue, and flagged this area as a source of uncertainty.
For valuation, JPMorgan said it moved to a 2028 EBIT-based approach, applying a 12.5x multiple. The bank added that going forward it expects the company's narrative and share price to be driven largely by the AI data center opportunity tied to Micro LED technology.
Key takeaways
- JPMorgan upgraded ams-Osram to Neutral and raised the price target to CHF 11.80 from CHF 5.45.
- The bank now expects the Micro LED AI data center opportunity to arrive "definitely before 2030," and noted a development partnership with an unnamed industry player; Microsoft is exploring the technology.
- Forecasts increased: 2026 revenue to 3,185m (+3%), 2027 revenue to 3,249m (+4%); adjusted EBITDA to 515m (+5%) in 2026 and 536m (+6%) in 2027.
Context and implications
JPMorgan's adjustments reflect stronger prospects in Opto Semiconductors and Lamps & Systems and signs of improvement in automotive and industrial end markets. The bank's valuation shift to 2028 EBIT with a 12.5x multiple indicates it is pricing in the longer-term earnings potential tied to Micro LED adoption in AI data centers.
Risks and uncertainties
- Consumer exposure: Smartphone-related revenue of around 600-700m, about 20% of group revenue, remains a point of caution that could weigh on results if the handset market softens.
- Execution and timing: While management has moved up the expected arrival of the Micro LED opportunity, the size and timing remain subject to development milestones and partner deployment.