Investing.com — Here are analysts' biggest trends in the artificial intelligence (AI) space this week.
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Truist says Microsoft is “the best way to use AI in journalism”
In a note this week, analysts at Truist Securities said Microsoft (NASDAQ:) remains “the best way to leverage AI in our reporting.”
“We believe many of the key themes driving Microsoft's business are indicative of major trends across both our infrastructure and security footprints,” the company said.
“In particular, we believe the company's evolving AI strategy will propel its leadership position in the software industry.”
Analysts say there will ultimately be multiple winners in the generative AI model space, but OpenAI will be the clear leader in the LLM space.
They argue that first-mover advantage in enterprise AI applications is durable because sufficient thought is given to architecture and governance decisions.
Analysts believe that Microsoft's partnership with OpenAI will provide additional benefits to MSFT compared to other cloud providers.
Palantir downgraded to sell with Monnes, Crespi and Hart
Analysts at Mones, Crespi & Hart downgraded the rating. Palantir Technologies (NYSE:) shares were changed to Sell from Neutral and the price target was set at $20.
PLTR shares fell about 5% after the market opened on Friday.
The decision comes after a disappointing enterprise software earnings season and an 18-month long generative AI hype cycle that failed to deliver big returns for most industry players, with analysts noting the market is likely to shy away from overvalued software stocks.
“After soaring 167% in 2023, Palantir shares are already trading at a premium entering 2024, up 49% year-to-date, and we believe valuation has now reached a greedy extreme,” they wrote.
Monnes believes Palantir is well-positioned to benefit from AI trends and volatile geopolitics in the long term, but he points out that the company's stock is currently trading at extreme valuation levels.
Analysts said pressures from the software industry, combined with irregular revenue from government contracts, meant “the economic quagmire's darkest days are yet to come.”
Bernstein Raises AAPL Price Target: Apple 'Can Become an AI Leader, Not a Laggard'
Investment firm Bernstein raised its price target on Apple (NASDAQ:), expressing confidence that investors think the iPhone maker “can be a leader, not a laggard, in AI.”
The 12-month price target was raised to $240 from $195, suggesting an upside of about 15% from current levels.
Bernstein analysts point out that ChatGPT has 100 million customers, while Apple has over 1 billion, meaning there is great potential to bring AI to a wider range of users and improve everyday convenience. Surprisingly, Apple has not paid ChatGPT, “highlighting the power of ChatGPT.”
Bernstein also said investors are more optimistic about the upcoming iPhone 16, with the AI features only available on the iPhone 15 Pro and above, and expect a strong product cycle.
“While there is growing confidence that Apple will benefit from AI, there is a risk that the benefits may take longer to materialize than some bulls think,” the analysts warned.
“Many Apple Intelligence features will be rolling out over the next year, but because they only work in English, some upgrades may be delayed until the iPhone 17 cycle,” it added.
Wedbush raises Micron stock price to $170 ahead of earnings release
Earlier this week, analysts at Wedbush Securities reaffirmed their buy recommendation on memory chip maker Micron Technology Inc. (NASDAQ:) and raised their price target to $170 from $130 ahead of the company's earnings release next week.
“In our view, the main question surrounding MU is whether history suggests the stock is overvalued relative to its asset levels,” the firm's analysts wrote.
While acknowledging that memory remains a cyclical industry, analysts believe that supply shortages will persist through this year and possibly much of 2025. This is due to a lack of new investment in NAND and DDR5, driven in part by increasing capacity requirements for high-bandwidth memory (HBM).
“As such, we expect average selling prices (ASPs), revenues, margins and EPS to all trend upwards, with book growth also expected as FCF flows into MU's balance sheet,” they noted.
“Overall, we expect to see only good news on MU's financials for the foreseeable future, and we expect the stock price to continue to rise until we see a change in industry investment plans.”
Rosenblatt: “Adeia is the most undervalued AI company on the market”
Rosenblatt Securities reiterated its buy recommendation on intellectual property (IP) licensing company Adair Inc. (NASDAQ:) shares, saying the company is “the most undervalued AI stock on the market.”
After speaking with Adair's CEO, CFO and vice president of investor relations, Rosenblatt emphasized that despite the company's leadership in key AI growth areas, the company remains “under the radar.”
The company's analysts noted that transistor limitations are bringing about the end of Moore's Law and highlighted the huge opportunity in semiconductors. “Adeia's hybrid bonding and chiplet IP provide a solution to these challenges,” they said.
Within the media sector, Rosenblatt rates Adeia as a “leader in digital entertainment IP,” well positioned to address the continued rise of video across devices.
Financially, Rosenblatt praised Adair's “60%-plus operating margins” and its valuation.
“We view Adair as the most undervalued AI company on the market,” they stressed. “We encourage investors to take a closer look at the company.”
