Investing.com – These are the biggest analyst moves in the artificial intelligence (AI) space this week.
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‘AI stands for Apple Intelligence:’ DA Davidson upgrades Apple to Buy
Analysts at wealth management firm DA Davidson upgraded shares of Apple (NASDAQ 🙂 from Neutral to Buy this week after the iPhone maker unveiled its long-awaited artificial intelligence strategy.
According to the company’s analysts, “AI now stands for Apple Intelligence,” which is the name of the company’s artificial intelligence platform presented at the WWDC event.
DA Davidson also raised his price target from $200 to $230.
“Another Napster to iTunes moment. We think yesterday’s presentation rhymes with one of Apple’s previous milestones: the transition of digital music from a standalone app with questionable regulatory status (i.e. Napster) to an in-app experience existing consumer apps (i.e. iTunes).” the analysts wrote.
“We believe that the integration of summarization, improved search, multimodality, text generation and improved photo editing into the existing ecosystem will drive much broader AI adoption than we have seen to date,” they added.
Analysts also highlighted that Apple is the first to introduce a significant agent capability, allowing Siri and other tools to execute tasks on the user’s behalf. Furthermore, they emphasize that Apple is in a unique position to offer these capabilities and “may be the only one capable of doing so in the short term.”
AMD lowers its rating because Morgan Stanley favors Nvidia and Broadcom
Meanwhile, AI chip maker Advanced Micro Devices (NASDAQ 🙂 earned a downgrade at Morgan Stanley on Monday, from overweight to equal weight.
While the bank continues to support the overall narrative, it believes investor expectations for AMD’s AI business are too high. Analysts at Morgan Stanley believe current AI expectations don’t leave much room for improvement, despite a recovery in the core business.
“We see limited upside revision potential for AI as of now,” the analysts wrote.
Additionally, Morgan Stanley notes that AMD looks expensive compared to other large-cap AI companies, such as NVIDIA Corporation (NASDAQ:) and Broadcom Inc (NASDAQ:), where the bank is more confident in upward revisions to forecasts for AI.
Despite the downgrade, Morgan Stanley analysts still see AMD’s product line as a strong contender in the client and server CPU markets this year.
Melius downgrades Adobe as enterprise software faces AI challenges
Earlier in the week, analysts at Melius lowered their rating on Adobe (NASDAQ 🙂) stock from Buy to Hold, with a price target of $510.
The investment firm notes that the enterprise application software sector is facing challenges with AI, drawing parallels with how on-premise hardware companies were affected by the shift to the cloud in the 2010s. They suggest this trend could persist longer than expected.
Melius highlights that AI, enabled by companies like Nvidia and leading cloud platforms, will accelerate the creation, customization and deployment of software. Additionally, coding tools are allowing smaller, AI-first competitors to emerge more easily.
They also note that most SaaS companies have been raising prices for years, making it harder to charge more for AI, and that AI-driven productivity may disrupt the traditional “seat model” business approach. “, which indicates a possible transition in business models.
“Furthermore, we see AI as a disruptor to traditional databases as unstructured data increases in both importance and usability,” Melius analysts said. “In short, you could see the impact of AI on Snowflake (NYSE 🙂 and even parts of Oracle (NYSE 🙂 with a hold rating), as well as continued impacts on Salesforce (NYSE 🙂 and Workday (NASDAQ 🙂 for a while) .
Broadcom is “one of the strongest bets on AI,” says Morgan Stanley
Ahead of releasing its better-than-expected earnings report on Wednesday, Morgan Stanley reiterated its overweight rating on Broadcom, calling the semiconductor company “one of the strongest bets on AI.”
The Wall Street giant pointed to several key catalysts for its positive outlook, including Broadcom’s growth prospects in AI, potential synergies from the VMware (NYSE:) acquisition, and the turnaround of its core enterprise semiconductor businesses.
Analysts at the bank project Broadcom’s AI revenue will rise from $4.2 billion in fiscal 2023 to $14 billion in fiscal 2025, which would represent about 39% of the company’s projected semiconductor revenue. .
“We expect Broadcom to easily meet, if not slightly exceed, AI goals,” the analysts noted. They believe Broadcom is poised to benefit from the deployment of Ethernet in AI data centers, the continued advancement of Google’s TPU, and the addition of two new ASIC clients.
MS: Tesla could make a phone with artificial intelligence technology
Tesla (NASDAQ 🙂 could soon enter the smartphone market, according to analysts at Morgan Stanley.
“The car is an extension of the telephone. The telephone is an extension of the automobile,” the Wall Street firm noted, based on its conversations with automotive executives and industry experts. “The line between car and phone is getting really blurred,” she added.
Morgan Stanley analysts have long considered Tesla’s potential to expand into edge computing domains beyond vehicles. In October, they emphasized the concept of an AI mobile assistant as a significant innovation.
This idea resurfaced when Tesla CEO Elon Musk mentioned that developing such a device is “not out of the question” after Apple’s WWDC.
“As Mr. Musk continues to invest more in his own LLM/genAI efforts, such as ‘Grok,’ the potential strategic and user experience overlap becomes more obvious,” the analysts wrote.
Supercomputing at both the data center and edge levels is increasingly relevant from an automotive perspective. The latest Tesla vehicles, capable of wireless firmware updates, contain batteries with the power equivalent to approximately 2,000 iPhones and come equipped with liquid-cooled inference supercomputers.
Morgan Stanley asked, “What if your phone could harness your vehicle’s computing power and battery supply to run artificial intelligence 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 run other remote apps while interacting with their vehicles,” the analysts added.