Investing.com – Here are the biggest artificial intelligence (AI) analyst moves for the week.
InvestingPro subscribers always receive the first comments on market-moving AI analyst comments. Upgrade today!
UBS Cuts Tesla (NASDAQ: ) to Sell on Valuation Reassessment, High AI Costs
Analysts at UBS cut Tesla shares from Neutral to Sell on Friday, while raising their price target to $197 from $147.
This adjustment is intended to reflect a reevaluation of Tesla’s valuation amid market expectations for its growth, particularly in AI.
UBS acknowledged Tesla’s diversification beyond automobile manufacturing, citing positive developments in its Energy and Full Self-Driving (FSD) segments as supporting factors.
However, expectations for Tesla’s core auto business are falling, analysts warned. They noted that Tesla’s valuation has historically included a premium for its potential growth in various areas. However, the challenge lies in the correct assessment of this “optionality”.
Recently, Tesla’s premium has widened due to increased enthusiasm around AI. After evaluating Tesla’s various segments, UBS concluded that the current stock price implies a value of over $500 billion for future growth initiatives.
To justify current stock levels, Tesla would need to reach a future value of $1 trillion within five years, and even more to support a Buy rating, analysts said.
They also raised concerns about the high investment costs of AI, the unpredictable pace of improvement and the long-term nature of potential returns. The firm warned that if the market’s excitement about AI wanes, Tesla’s stock could be adversely affected.
With shares trading at 86 times trailing-twelve-month (NTM) P/E, the lack of visibility and potential for delayed growth opportunities warranted a downgrade to Sell, UBS said.
BofA raises Apple (NASDAQ: ) price target on AI-driven iPhone upgrade cycle
Bank of America raised its price target on Apple to $256 from $230 in a note to clients on Thursday, citing increased confidence in a multi-year iPhone upgrade cycle.
The growth is driven by a global smartphone survey and analysis of Apple’s aging installed base, showing strong upside potential.
“We are increasing our PO on Apple to $256 with increased confidence in a multi-year iPhone upgrade cycle driven by a strong installed base and GenAI features that should provide a boost to customer targets to improve,” analysts wrote in a note.
The survey, conducted in the US, UK, China and India, found that a large proportion of iPhone users still use older models: 29% have an iPhone 13, 13% have an iPhone 12 and over 31% have an iPhone 11 . or older.
The note also highlighted that the recent Worldwide Developers Conference (WWDC) has increased customer intentions to upgrade in 2024. This is further supported by strong service growth and margin expansion, leading BofA to reiterate a positive outlook for AAPL.
Nomura downgrades SMCI amid ‘constrained share price’
Earlier in the week, research analysts at Nomura downgraded Super Micro Computer (NASDAQ: ) stock from Buy to Neutral due to “limited share price reversal.”
“Following Supermicro’s strong guidance for CY4Q23-CY1Q24, we believe Supermico’s performance potential changed from ‘easy to beat low market expectations’ in CY4Q23 to ‘less room to beat already high expectations’ of the market’, analysts noted.
Nomura’s revised outlook is due to uncertainties surrounding the gradual easing of CoWoS-S supply in 2024 and the possible transition period between Nvidia’s Hopper and Blackwell GPUs in the second half of the year.
While SMCI’s advanced liquid cooling solutions provide a competitive edge and support gross profit margins, analysts said limited order visibility amid these uncertainties could make it challenging to exceed sales expectations “and thus this could be a bag mixed, in our view,” Nomura’s team. added.
The firm expects the AI server maker’s quarterly sales to match its guidance of $5.1 billion to $5.5 billion, noting that some liquid cooling projects have been delayed to later quarters, reducing the likelihood of beating guidance.
Nomura analysts also believe that Supermicro’s medium-term outlook remains unclear due to potential uncertainties of AI server orders. This is due to new procurement decisions by key customers and switching between Nvidia Hopper and Blackwell GPUs, which may impact SMCI as customers move towards adopting Blackwell GPU solutions.
Microsoft (NASDAQ: ) is still a GenAI leader – Morgan Stanley
Morgan Stanley analysts said Microsoft remains a strong GenAI leader, citing a recent 2Q24 CIO survey.
Survey data shows that Microsoft’s leadership in GenAI is yielding significant gains in growing IT stocks.
“Microsoft’s lead in terms of core spending targets and positioning in GenAI is improving more meaningfully,” the analysts said in a note.
Core spending growth expectations for Microsoft rose to 6.6%, the highest since Q2 2021. This growth is largely due to Microsoft’s strong presence in GenAI functionality and its Azure Cloud business.
CIOs are particularly optimistic about Microsoft’s GenAI products. The survey finds that 94% of CIOs plan to adopt Microsoft Generative AI products in the next 12 months, up from 63% in Q4 2023 and 47% in Q2 2023.
Microsoft 365 Copilot is the preferred solution, with 68% of CIOs intending to use it, followed by Azure OpenAI Services at 41%.
Keybanc Raises PTs on AI Chipmakers as AI Boom Continues
KeyBanc Capital Markets raised price targets for several major chipmakers, reiterating strong demand for AI products.
KeyBanc highlighted a significant recovery in traditional server demand, driven primarily by major US cloud providers such as Meta (NASDAQ: ) and Microsoft, along with steady demand from Chinese cloud service providers (CSPs) and improving average of demand within the Enterprises sector.
“For 2024, we are raising total server shipment estimates to +7% versus +4% previously, with Enterprise +5% and Cloud +8%,” the analysts said. They also predict that AI servers will grow by 150% to approximately 450,000 units in 2024.
Regarding Nvidia’s GB200, KeyBanc believes the NVL72 configuration will dominate demand in 2025 over the NVL36. The NVL72 offers 20-30 times the performance of the H100 and offers the lowest cost per mark solution. Thus, they expect the GB200 to generate over $200 billion in data center revenue for the chip maker in 2025.
KeyBanc has revised its price targets for several major chip stocks, including NVDA from $130 to $180. Monolithic power (NASDAQ: ) from $850 to $975, Cirrus Logic (NASDAQ: ) from $120 to $155 and Marvell Technology (NASDAQ: ) from $90 to $95.