Investing.com – Here are the biggest moves in artificial intelligence (AI) analysts this week.
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UBS Cuts Tesla (NASDAQ:) to Sell on Valuation Reassessment, High AI Costs
UBS analysts on Friday downgraded Tesla’s stock rating from neutral to sell, while raising its price target from $147 to $197.
This adjustment is intended to reflect a reassessment of Tesla’s valuation amid market expectations regarding its growth, particularly in the field of AI.
UBS acknowledged Tesla’s diversification beyond auto manufacturing, citing positive developments in its Energy and Full Self-Driving (FSD) segments as supporting factors.
Analysts, however, caution against expectations for Tesla’s core automotive business. They note that Tesla’s valuation has always included a premium for its potential growth in various areas. The challenge, however, is to accurately assess this “optionality.”
Recently, Tesla’s premium has increased due to the growing enthusiasm for AI. After evaluating Tesla’s various segments, UBS concluded that the current stock price implied a value of more than $500 billion for future growth initiatives.
To justify current inventory levels, Tesla would need to reach a future value of $1 trillion within five years, and even more to support a buy rating, analysts said.
They also raised concerns about the high costs of investing in AI, the unpredictable pace of improvements, and the long-term nature of potential returns. The company warned that if market enthusiasm for AI wanes, Tesla’s market multiple could be negatively impacted.
With the stock trading at 86 times its next twelve-month (NTM) P/E, the lack of visibility and the potential for delayed growth opportunities justified the downgrade to Sell, UBS said.
BofA Raises Price Target for Apple (NASDAQ:) on AI-Driven iPhone Upgrade Cycle
Bank of America raised its price target for Apple to $256 from $230 in a note to clients Thursday, citing increased confidence in a multiyear iPhone upgrade cycle.
The increase was driven by a global smartphone survey and analysis of Apple’s aging installed base, indicating strong upside potential.
“We are raising our PO on Apple to $256 due to increased confidence in a multi-year iPhone upgrade cycle, driven by an aging installed base and GenAI features that should drive customer upgrade intentions,” the analysts wrote in a note.
The survey, conducted in the US, UK, China and India, found that a large portion of iPhone users are still using older models: 29% own an iPhone 13, 13% an iPhone 12 and over 31% an iPhone 11 or older.
The note also highlighted that the recent Worldwide Developers Conference (WWDC) increased customer intentions to upgrade in 2024. This is further supported by strong services growth and margin expansion, prompting BofA to reiterate its positive outlook on AAPL.
Nomura downgrades SMCI due to ‘limited share price upside’
Earlier this week, research analysts at Nomura downgraded Super Micro Computer (NASDAQ:) stock from Buy to Neutral due to “limited upside in the stock price.”
“Following Supermicro’s strong guidance for Q4 CY 2023 through Q1 CY 2024, we believe Supermicro’s performance potential has shifted from ‘easy to beat low market expectations’ in Q4 CY 2023 to ‘less room to beat already high market expectations,'” the analysts noted.
Nomura’s revised outlook is due to uncertainties surrounding the gradual easing of CoWoS-S supply in 2024 and the potential transition period between Nvidia’s Hopper and Blackwell GPUs in the second half of the year.
While SMCI’s advanced liquid cooling solutions provide a competitive advantage and support gross profit margins, analysts said limited order visibility amid these uncertainties could make it difficult to exceed sales expectations “and so it could be a mixed bag, in our view,” the Nomura team added.
The company expects the AI server maker’s June quarterly sales to be in line with its guidance of $5.1 billion to $5.5 billion, noting that some liquid cooling projects have been postponed to later quarters, reducing the likelihood of beating forecasts.
Nomura analysts also believe that Supermicro’s short- and medium-term outlook remains uncertain due to potential uncertainties related to AI server orders. This is due to new sourcing decisions by major customers and the transition from Nvidia’s Hopper to Blackwell GPUs, which could affect SMCI as customers tend to adopt Blackwell GPU solutions.
Microsoft (NASDAQ:) Remains a Leader in GenAI – Morgan Stanley
Morgan Stanley analysts said Microsoft remains a strong leader in GenAI, citing a recent Q2 2024 CIO survey.
Survey data shows that Microsoft’s leadership in GenAI is driving substantial market share gains in the IT industry.
“Microsoft’s lead in core spending intentions and positioning in GenAI is improving more meaningfully,” the analysts said in a note.
Microsoft’s core spending growth expectations increased to 6.6%, the highest level since Q2 2021. This increase is largely driven by Microsoft’s strong presence in GenAI functionality and its Azure Cloud business.
CIOs are particularly optimistic about Microsoft’s GenAI products. The survey found that 94% of CIOs plan to adopt Microsoft’s Generative AI products in the next 12 months, up from 63% in Q4 2023 and 47% in Q2 2023.
Microsoft 365 Copilot is the preferred solution, with 68% of CIOs intending to use it, followed by Azure OpenAI Services with 41%.
Keybanc Raises AI Chipmaker PTs as AI Boom Continues
KeyBanc Capital Markets has raised price targets for several major chipmakers, reiterating strong demand for AI products.
KeyBanc highlighted a significant recovery in demand for traditional servers, driven primarily by major U.S. cloud providers like Meta (NASDAQ:) and Microsoft, as well as sustained demand from Chinese cloud service providers (CSPs) and moderately improving demand within the enterprise sector.
“For 2024, we are increasing our total server shipment estimates to +7% from +4% previously, with +5% for Enterprise servers and +8% for Cloud servers,” the analysts said. They also forecast AI servers to grow 150% to about 450,000 units in 2024.
As for Nvidia’s GB200, KeyBanc estimates that the NVL72 configuration will dominate demand in 2025 compared to the NVL36. The NVL72 offers 20 to 30 times the performance of the H100 and offers the lowest cost-per-chip solution. As such, they expect the GB200 to generate over $200 billion in revenue for the chipmaker’s data centers in 2025.
KeyBanc revised its price targets for several leading chip stocks, including NVDA, from $130 to $180. Monolithic power (NASDAQ:) from $850 to $975, Cirrus Logic (NASDAQ:) from $120 to $155 and Marvell (NASDAQ:) Technology from $90 to $95.