Investing.com – Here are the biggest artificial intelligence (AI) analyst moves this week.
InvestingPro subscribers always get the first feedback from market-moving AI analysts. Upgrade today!
“AI stands for Apple's intelligence:” DA Davidson upgrades Apple to buy
Analysts at wealth management firm DA Davidson upgraded Apple (NASDAQ:) shares from neutral to buy this week after the iPhone maker introduced its long-awaited artificial intelligence strategy.
According to company analysts, “AI now stands for Apple Intelligence,” which is the name of the company's AI platform that was unveiled at the WWDC event.
DA Davidson also raised his price target from $200 to $230.
“Another Napster to iTunes moment. We believe yesterday's offering aligns with one of Apple's previous landmark moments — the transition of digital music from a standalone app with questionable regulatory status (i.e. Napster) to an experience integrated into existing consumer apps (i.e. iTunes),” he wrote. Analysts.
“We believe that integrating summarization, augmented search, multi-method, text generation, and enhanced image editing into the existing ecosystem will lead to a much broader adoption of AI than we have seen to date,” they added.
Analysts also highlighted that Apple was the first to offer a meaningful agent capability, allowing Siri and other tools to perform tasks on the user's behalf. Furthermore, they stress that Apple is uniquely positioned to offer these capabilities and “may be the only one able to do so anytime soon.”
AMD was downgraded because Morgan Stanley favors Nvidia and Broadcom
Meanwhile, AI chip maker Advanced Micro Devices (NASDAQ:) received a downgrade from Morgan Stanley on Monday, from overweight to equal weight.
While the bank still supports the overall narrative, it believes investor expectations for AMD's AI business are too high. Morgan Stanley analysts believe that the current outlook for artificial intelligence does not leave much room for upside, despite the recovery in the core business.
“We see limited upward revision potential for AI from here,” the analysts wrote.
Furthermore, Morgan Stanley notes that AMD appears expensive compared to other big AI peers, such as NVIDIA Corporation (NASDAQ:) and Broadcom Inc (NASDAQ:), as the bank has more confidence in upward revisions to its AI forecasts.
Despite the downgrade, Morgan Stanley analysts continue to view AMD's product lineup as a strong contender in the consumer and server CPU markets this year.
Melius downgrades Adobe as enterprise software faces AI challenges
Earlier in the week, Melius analysts lowered their rating on Adobe stock (NASDAQ:) from buy to hold, with a price target of $510.
The investment firm notes that the enterprise application software sector faces challenges with artificial intelligence, drawing comparisons to how on-premises hardware companies were affected by the shift to the cloud in the 2000s. They point out that this trend may continue longer than expected.
Milius highlights that AI, powered by companies like Nvidia and major cloud platforms, will speed up the creation, customization and deployment of software. Moreover, programming tools allow smaller AI-first competitors to emerge more easily.
They also point out that most SaaS companies have been increasing prices for years, making it difficult to charge more for AI, and AI-driven productivity may disrupt the traditional “seat model” business approach, indicating a potential shift in business models.
“Furthermore, we see AI as a disruption to traditional databases as unstructured data rises in importance and ease of use,” Melius analysts said. “In short, you can see the impact of AI on Snowflake (NYSE:) and even parts of Oracle (NYSE:), as well as continuing impacts on Salesforce (NYSE:) and Workday (NASDAQ:) for a while.”
Broadcom is “one of the strongest AI plays,” Morgan Stanley says.
Ahead of its better-than-expected earnings report on Wednesday, Morgan Stanley reiterated its overweight rating for Broadcom, calling the semiconductor company “one of the strongest AI companies.”
The Wall Street giant cited several key catalysts for its positive outlook, including Broadcom's growth prospects in AI, potential synergies from its VMware (NYSE:) acquisition, and a recovery in its core enterprise semiconductor business.
The bank's analysts expect Broadcom's AI revenue to rise from $4.2 billion in fiscal 2023 to $14 billion in fiscal 2025, representing about 39% of the company's projected semiconductor revenue.
Analysts indicated that they expect Broadcom to easily meet, if not slightly exceed, its AI goals. They believe Broadcom is poised to benefit from the deployment of Ethernet in AI data centers, Google's continued TPU ramp-up, and the addition of two new ASIC customers.
MS: Tesla could make an AI phone
Tesla (NASDAQ:) may soon venture into the smartphone market, according to Morgan Stanley analysts.
“The car is an extension of the phone. The lines between the car and the phone are really blurring,” the Wall Street company noted, based on its discussions with auto executives and industry experts.
Morgan Stanley analysts have long considered Tesla's potential to expand into edge computing beyond vehicles. In October, they emphasized the mobile AI assistant concept as an important innovation.
This idea resurfaced when Tesla CEO Elon Musk stated that developing such a device was “not out of the question” after Apple's WWDC conference.
“As Mr. Musk continues to invest more heavily in his LLM/genAI efforts, such as Grok, the potential overlap between strategy and user experience becomes clearer,” the analysts wrote.
Supercomputing at both the data center and edge levels is becoming increasingly important from an automotive perspective. Tesla's latest cars, capable of over-the-air firmware updates, have batteries equivalent to the power of nearly 2,000 iPhones, and come equipped with liquid-cooled inference supercomputers.
Morgan Stanley asked: “What if your phone could leverage your car’s computing power and battery supply to run AI applications?” They noted that edge computing and AI have highlighted challenges such as battery life, thermal management, and latency in integrating powerful AI-driven applications with today's smartphones.
“Any Tesla owner will tell you how they use their smartphone as a primary key to unlock their car as well as operate other apps remotely while they interact with their car,” the analysts added.
