Investing.com – Here are the biggest artificial intelligence (AI) analyst moves this week.
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RBC raises its price target for Microsoft as AI remains a key driver
Analysts at investment bank RBC Capital Markets raised their price target on Microsoft (NASDAQ:) stock from $450 to $500 on Friday, citing positive feedback from recent investor meetings with Microsoft's investor relations managers.
RBC stressed that AI remains a key growth driver for Microsoft, highlighting that the tech giant continues to make significant investments in this fast-growing sector.
“While CapEx will likely continue to drive and impact margins, Microsoft is simultaneously tracking demand signals and focusing on lowering the cost curve,” the analysts said in the note.
“Advancements like GPT-4o, which is more efficient, and Maia (custom AI silicon) will help lower the cost curve,” they added.
RBC also emphasized Microsoft's expertise in cloud services as a key advantage, providing a unified architecture for all AI workloads.
Furthermore, RBC noted that although Microsoft's core cloud business is still in its early stages, there is a clear trend for companies to move more workloads to the cloud.
They noted that Azure's growth, excluding AI, accelerated in the fiscal second quarter.
“More importantly, Azure Core benefits from the broader AI roadmap, as a third of the 50,000+ Azure AI customers are completely new to Azure,” the analysts noted.
MS: Dell remains the best way to play building AI server momentum
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During the week, Morgan Stanley analysts reiterated that Dell Technologies (NYSE:) is a top pick and raised their 12-month price target on the technology stock to $152 from $128.
“Even after moving over 100% in T12M, DELL trades at just 13 times new FY2026 EPS of $10.12 (18% higher than Street) and remains the best play to 1) build AI server momentum, 2 ) increased demand for storage, and 3) improved personal computing, analysts said.
In their note, analysts highlighted a significant increase in momentum at Dell over the past four weeks, an increase they attributed to competitive wins in Tier 2 cloud service provider (CSP) AI server contracts, additional enterprise AI server orders, and increased demand On storage. .
As a result, the technology company now boasts its strongest forward spending intentions in more than six years.
“We believe the significant Tier 2 CSP win noted above could equate to $2 billion in order this quarter, meaning the AI backlog at the end of the April quarter will be just under $4 billion, and possibly higher given the Consider wins for smaller institutions, excluding any material changes in the review in the April quarter.
Mizuho analyst says investors are becoming more hesitant to own AMD shares
Investors are becoming increasingly hesitant to own AMD (NASDAQ:) stock, a Mizuho desk analyst noted in a new note.
“Why add AMD if I have NVDA and AVGO here, which are cheaper and I feel much less risk?” This appears to be the major pullback among market participants, the analyst said.
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Earlier in the week, the company's shares rose to a new intraday high of $168, however, there were no specific company-related events that could be attributed to the rise. According to the analyst, it appears that the short squeeze was impacting a large portion of the technology market.
Meanwhile, AMD, which has become one of the AI darlings over the past year or so thanks to its powerful AI-oriented GPUs, remains a significant short position for many East Coast hedge funds, with many investors shunning Buy Only (LO) Mizuho said this was done ahead of Nvidia's Blackwell launch later this year.
“Stoke looks like a plane crash survivor on a lifeboat in the middle of a huge ocean just looking for land,” the analyst wrote.
“I'm still a bull and love the risk reward if you have the patience and duration (think 6-9 months).” But I sense anxiety, hesitation and fears among investors.
Baidu downgraded its rating at Morgan Stanley amid slower-than-expected AI monetization
Meanwhile, Morgan Stanley analysts downgraded Baidu (NASDAQ:) stock this week as they forecast a tough outlook for the Chinese internet company's advertising revenues, while monetizing its AI projects is expected to take some time.
For this reason, the Wall Street giant downgraded Baidu's US-listed shares to equal weight from overweight, while also lowering its price target to $125 from $140.
This downward revision follows a decline in Baidu's profits in the first quarter, affected by weak Chinese economic conditions that affected its core advertising revenue.
The company, which is China's largest internet search engine, has seen some revenue boosts from its AI initiatives – specifically the ChatGPT-like Ernie bot and from AI-driven demand for its cloud services. However, this was offset by much higher expenses on AI development at Baidu, Morgan Stanley analysts explained.
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They believe weakness in Baidu's advertising division is set to continue, and that shifting its traditional business to AI offerings is “slow and lagging in user retention.”
Deutsche Bank downgrades Accenture to Hold, doesn't see GenAI as a growth catalyst
Likewise, shares of Ireland-based Accenture (NYSE:), an IT services provider, also received a cut.
Specifically, a Deutsche Bank analyst downgraded the stock from buy to hold, and lowered his 12-month price target to $295 from $409.
According to the analyst, after Accenture's organic revenue contracted by an estimated -2.5% cc in Q2 2024, the company appears to have gone from being a consistent market share gainer, especially over the past two years, to now losing market share to Her peers. In the compressed IT services industry.
“ACN’s outlook remains fundamentally weak with further downward revisions to Street estimates possible, in our view,” the analyst wrote.
“Our channel checks indicate that Gen AI will not be a driver of aggressive revenue growth for ACN in the near/medium term, and will be disruptive to current pricing structures,” they added.
The debate over whether Gen AI could negatively impact IT services vendors is expected to continue to impact industry multiples, which could push Accenture's valuation to a lower, more normalized historical NTM P/E multiple, the investment bank said.