Amentum Stock Surges as Wall Street Bets on Nuclear Power for AI.
Analyst price target upgrades highlight the company's role in the AI energy boom, but recent earnings concerns and significant volatility paint a more complex picture for investors.
Shares of government engineering firm Amentum Holdings (AMTM) experienced a notable surge in morning trading, climbing 3.2% after receiving positive attention from Wall Street. The catalyst for the jump was a series of price target upgrades from influential analysts, signaling growing confidence in the company’s strategic direction, particularly its connection to the booming artificial intelligence sector.
The Bull Case: A Nuclear-Powered Future for AI
Leading the upgrades were BofA Securities and Goldman Sachs. BofA Securities raised its price target on Amentum to $27 from $26, specifically pointing to the market premium the company commands for its “nuclear exposure.” This refers to Amentum’s expertise and work within the nuclear industry, which is increasingly viewed as a critical power source for energy-hungry AI data centers. While maintaining a Neutral rating, BofA also acknowledged the company’s diverse portfolio and improving free cash flow as additional strengths.
Goldman Sachs issued an even more bullish revision, boosting its price target significantly to $26 from a previous $21. This wave of analyst optimism, coupled with recent reports of growing interest from institutional investors, suggests that the financial community is taking a serious look at Amentum’s potential to capitalize on the energy demands of the AI megatrend.
After the initial excitement, the stock settled at $26.43, still marking a solid 3.1% gain from the previous day’s close.
Mixed Signals: Volatility and Earnings Worries
Despite the positive news, the market’s reaction suggests that while the analyst upgrades are meaningful, they have not fundamentally altered the broader perception of the company. Amentum is known for its extreme stock volatility, having made 33 moves greater than 5% over the past year alone.
This volatility was on full display just a week ago when the stock dropped 3.3%. That decline was triggered by the company’s third-quarter financial results. While Amentum reported revenue of $3.56 billion, which beat analyst forecasts, its profitability raised a red flag. The company’s GAAP (Generally Accepted Accounting Principles) profit was only $0.04 per share, falling a dramatic 73.3% short of consensus estimates. Although adjusted earnings, which strip out certain items, were stronger, investors focused on the substantial miss in standard profitability, even as the company slightly raised its full-year revenue guidance.
The Broader Context for Investors
Looking at the bigger picture, Amentum’s stock performance tells a story of both recent success and long-term challenges. The stock is up an impressive 22% since the beginning of the year. However, at its current price of $26.43 per share, it remains 20.9% below its 52-week high of $33.40, which it hit in November 2024.
Furthermore, early investors have yet to see a positive return. An investment of $1,000 in Amentum’s IPO in September 2024 would now be worth approximately $895.61. This highlights the contrast between the company’s compelling, forward-looking narrative and its historical performance, presenting a complex decision for potential investors weighing long-term thematic growth against recent financial results and market volatility.
