Investing.com — A look at this week's biggest analyst moves in the artificial intelligence (AI) space.
InvestingPro subscribers are always the first to know what market-moving AI analysts are saying. Upgrade today!
RBC raises Microsoft price target as AI remains one of the key drivers
Analysts at investment bank RBC Capital Markets on Friday set a price target for Microsoft (NASDAQ:) stock at $450 to $500, citing positive feedback from a recent investor meeting with Microsoft's director of investor relations. I raised it to .
RBC highlighted that AI remains a key growth driver for Microsoft and highlighted that the tech giant continues to invest heavily in this rapidly evolving field.
“While capital spending is likely to continue to increase and impact margins, Microsoft remains focused on following demand signals and simultaneously lowering its cost curve,” analysts said in a note.
“Advances like more efficient GPT-4o and Maia (custom AI silicon) will help lower the cost curve,” they added.
RBC also highlighted Microsoft's cloud services expertise in providing a unified architecture for all AI workloads as a major advantage.
Additionally, RBC noted that while Microsoft's core cloud business is still in its infancy, there is a clear trend for enterprises to move more workloads to the cloud.
They noted that Azure growth excluding AI accelerated in the second quarter of the fiscal year.
“Importantly, one-third of the 50,000+ Azure AI customers are new to Azure, so Azure at its core benefits from an extensive AI roadmap,” the analyst noted. Masu.
MS: Dell remains the best way to build AI server momentum
remove ads
.
This week, Morgan Stanley analysts reiterated Dell Technologies (NYSE:) as a top pick and raised the tech stock's 12-month price target from $128 to $152.
“Even after more than 100% in T12M, DELL trades at just 13x FY26 new EPS of $10.12 (18% above expectations) and is expected to: 1) gain momentum in AI Server; 2) adjusting storage demand and 3) improving the PC market,” the analyst said.
Analysts highlighted in the note that Dell's momentum has increased significantly over the past four weeks, with the surge driven by competitive wins in Tier 2 cloud service provider (CSP) AI server contracts, enterprise AI We analyze that this is due to additional orders for servers and increased storage demand. .
As a result, the technology company now boasts its strongest future spending intentions in six years.
“We believe the large Tier 2 CSP orders mentioned above could represent $2 billion in orders this quarter, meaning our AI backlog at the end of the April quarter was just under $4 billion. “Unless there is a significant change in sales for the April quarter, it could be even higher taking into account small business orders,” they added.
Mizuho analyst says investors are becoming more hesitant about owning AMD stock
Investors are increasingly hesitant to own AMD (NASDAQ:) stock, analysts at Mizuho Desk wrote in a new note.
“If you own NVDA and AVGO, why would you add AMD when you feel it's cheaper and much less risky?” This is the main pushback among market participants Analysts said that appears to be the case.
remove ads
.
Earlier this week, the company's stock soared to an intraday high of $168, but there were no specific company-related events that could be attributed to the rally. A short squeeze appears to be impacting much of the tech market, analysts say.
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 long-only (LO) ) Investors avoid this. According to Mizuho, the announcement will be made ahead of NVIDIA's launch of Blackwell later this year.
“Mr. Stock feels like a plane crash survivor on a life raft in the middle of a vast ocean, just looking for land,” the analyst wrote.
“I'm a bull and love the risk reward if you have the patience and time frame (think 6-9 months). But I also understand investors' worries, hesitations and concerns.”
Baidu downgraded by Morgan Stanley as AI monetization is slower than expected
Meanwhile, Morgan Stanley analysts said this week that while the outlook for Chinese internet company Baidu's (NASDAQ:) advertising revenue is bleak, they expect it will take time for AI ventures to monetize. The rating was downgraded.
As a result, the Wall Street giant downgraded Baidu's U.S.-listed shares from overweight to equal weight, and lowered its price target from $140 to $125.
The downward revision comes after Baidu's first quarter results were weak due to the impact of the slowdown in the Chinese economy, which squeezed core advertising revenue.
The company, China's largest internet search engine, saw some revenue growth from AI initiatives, particularly its ChatGPT-like Ernie bot and AI-driven demand for cloud services. However, Morgan Stanley analysts explained that this was offset by a significant increase in Baidu's AI development costs.
remove ads
.
They believe Baidu's advertising division will continue to suffer, and that the company's transition from traditional businesses to AI products has been “slow and user retention is slow.”
Deutsche Bank reduces Accenture holdings, doesn't see GenAI as growth catalyst
Similarly, the stock price of Ireland-based IT services provider Accenture (NYSE:) was also downgraded.
Specifically, Deutsche Bank analysts downgraded the stock from a “buy” rating to a “hold” rating and lowered their 12-month price target from $409 to $295.
The analyst said that after Accenture's organic revenue declined an estimated -2.5% in the second quarter of 2024, the company is now losing market share to its peers, especially from a company that has consistently gained market share over the past two years. It seems like he is losing it. The IT service industry is under pressure.
“We believe ACN's outlook remains fundamentally weak and that street expectations could be further revised downward,” the analyst said.
“Our channel checks suggest that Gen AI will not be a catalyst for significant revenue growth for ACN in the near to medium term, instead causing disruption to the existing pricing structure,” they added. .
The debate over whether Gen AI could have a negative impact on IT services vendors is expected to continue to weigh on industry price multiples, with Accenture's valuation at a lower and more normalized rate. The investment bank said that the NTM P/E multiple could return to .
