VW restructuring, Kia FX and AI industry calls round out analyst notes
Morgan Stanley analysts described Volkswagen’s restructuring plan as a “potential game changer” but said its assumptions and targets appear demanding in a note. Executing the plan—reducing capacity and cost, adding flexibility and speed to market—would make the analysts more positive on the company. “We see many low hanging fruit and think that VW has room to fund a good part of that restructuring via nonstrategic asset disposals,” Morgan Stanley wrote. Some of the plan depends on potentially bumpy negotiations with unions, which could generate positive and negative news flow in the second half, the analysts added. Volkswagen shares closed at 81.46 euros.
In a separate note, Morgan Stanley upgraded Renault to equalweight from underweight and raised the target to 31 euros from 25 euros. The French carmaker is the biggest beneficiary of potential regulatory protection because of its exposure to a strong European market, the analysts wrote. Renault is unlikely to sustain the market share growth it saw last year amid competition with Chinese carmakers, but that does not rule out positive volume growth, Morgan Stanley added, because Renault is the most exposed company to European pent-up demand, which has further room to recover. Chinese competition is a long-term concern, the analysts wrote, but it brings incentives to adjust costs and capacity. Renault shares closed at 29.36 euros.
Oil prices climbed more than 2% in early trading as Iran-backed Houthi militants seized key territory around the strategic Bab al-Mandeb Strait, while drone attacks on Saudi Arabia’s East-West pipeline constrained supply. The Bab al-Mandeb Strait and the Strait of Hormuz—the two most important energy corridors in the Middle East—are under the sway of Iran and its allies, according to the WSJ market roundup. The drone attacks on the East-West pipeline, which had become a key conduit for Saudi Arabian crude to reach customers, will also constrain supply. In morning European trade, Brent crude rose 2.2% to $106.93 a barrel while WTI futures gained 2.2% to $102.23 a barrel. In London, BP gained 1.15% and Shell rose 1%. Spain’s Repsol, Italy’s Eni and France’s TotalEnergies rose more than 1%.
Nomura’s Angela Hong said Kia’s resilient global vehicle-sales growth could continue through the end of 2026 despite challenges from the won’s appreciation. The South Korean carmaker’s sales are supported by gains in its U.S. market share as well as new-model launches focused on higher-margin hybrid electric vehicles, the analyst said. Like other Korean exporters, Kia is facing unfavorable foreign-exchange conditions, Hong said, citing the local currency’s gains of about 13% against the greenback since early July. Every 1% appreciation in the won against the dollar could drag Kia’s operating profit by 1.5% to 2%, she added. Nomura cut its target price for the stock to 220,000 won from 250,000 won but maintained a buy rating. Shares are 1.7% lower at 124,500 won.
Sam Altman confirmed OpenAI won’t go public until next year, Neostellar Capital’s Evan Schlossman said, noting that has been the prevailing sentiment for some time. Altman’s statements are tied to him and Elon Musk supporting Anthropic CEO Dario Amodei’s call to slow down AI development over safety concerns, Schlossman added. The company just raised $122 billion, showcasing how much demand they still have in the private markets, Schlossman said. Clearly OpenAI isn’t facing any pressure to run to the public markets, and will go public whenever it’s most advantageous to the business, he said.
Giuseppe Sette, co-founder and president of investment research platform Reflexivity, said leaders of the top AI companies in the U.S. are in rare agreement that they need to slow development of the technology, but a major slowdown is unlikely while China is in the race. Clearly something happened that was big enough to force a unified stance between Dario Amodei, Sam Altman and Elon Musk, Sette said. And it was probably stopped at the last minute before disaster struck, he added. Any retracement in AI stocks from the truce between the U.S. leaders is “simply a buying opportunity,” Sette said.