Analysts offered mixed assessments of the auto and transport sector on Monday, with geopolitical tensions in the Middle East, surging demand related to artificial-intelligence data centers, and shifting airline capacity shaping the outlook, according to research notes reported by The Wall Street Journal.
The views come as markets continue to digest the effects of renewed hostilities between Israel and Iran, which have injected uncertainty into oil supply routes through the Strait of Hormuz, while technology-driven demand for components and new AI applications creates opportunities for companies across the sector.
Norbert Rucker, head of economics and next generation research at Julius Baer, said in a note that beyond the geopolitical noise, the oil market is resilient and has digested the supply shock well for now. He noted that several vessels transited the Strait of Hormuz over the weekend and said a greater degree of trade pragmatism is reflected in bilateral deals between Gulf-locked sellers and mostly Asian buyers with Iran. While the current hostilities could lift hesitance in the short term, common interests and the profit opportunity should keep those transits growing over time, Rucker added. Julius Baer maintained its cautious view that oil prices will head lower after the summer.
Bernstein analysts Alex Irving and Antoine Madre said in a research note that Ryanair’s future profitability depends largely on either lower fuel costs or reduced airline capacity across the industry. When fuel prices rise significantly, airlines such as the Irish budget carrier typically respond by cutting flights or exiting the market altogether, the analysts said. That reduction in capacity allows airlines to charge higher ticket prices, helping restore profitability, they added. Irving and Madre said Ryanair is well positioned to benefit from either scenario: lower fuel prices would directly reduce costs, while industry-wide capacity cuts could support higher fares.
In Japan, Jefferies analysts said Sumitomo Electric Industries’ earnings are likely to expand further due to demand related to AI data-center buildouts by large technology companies. In the company’s infocommunications segment, demand for cables, connectors, and other devices tied to AI data centers should remain robust. Jefferies forecast Sumitomo Electric’s operating profit at 473.2 billion yen for the fiscal year that began in April, compared with the company’s own forecast of 425 billion yen. The U.S. bank maintained its buy rating on the stock and raised its target price to 20,600 yen from 16,700 yen. Shares were trading 6.8% lower at 12,125 yen.
Daiwa analyst Kelvin Lau said XPeng will likely benefit from its AI-related businesses such as humanoid robots and robotaxis. Daiwa increased its 2027 revenue guidance for XPeng by 13% to reflect the expected revenue contribution from humanoid robots. Lau said XPeng’s strategy of localizing production will likely mitigate geopolitical risks. The company’s recent gross profit margin expansion also indicates an improving product mix and better cost control, he added. XPeng management expects overseas revenue contribution to exceed 20% starting in the second quarter, supported by the start of P7+ deliveries abroad. Daiwa maintained a buy rating on the stock but cut its target price to $25 from $29 on lower EV growth expectations in the domestic market. Shares last closed at $15.95.
The Dow Jones Industrial Average closed at 51,561.93 on Monday.