Investing.com – Here are the biggest moves by analysts 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 Apple stock to “buy” from “neutral” this week after the iPhone maker unveiled its much-anticipated artificial intelligence strategy.
“AI now stands for Apple Intelligence,” the company’s analysts said, which is the name of the artificial intelligence platform the company launched at the WWDC event.
DA Davidson also raised the target price from $200 to $230.
“Another Napster to iTunes moment. We believe yesterday’s demo rhymes with one of Apple’s previous milestone moments – the transition of digital music from a standalone app with questionable regulatory status (i.e. Napster) to being integrated into existing consumer apps (i.e. Napster) i.e., the iTunes experience,” the analysts wrote.
“We believe that integrating summarization, enhanced search, multimodality, text generation and enhanced photo editing into the existing ecosystem will drive broader adoption of AI than has been achieved to date,” they added.
Analysts also emphasized that Apple was the first company to introduce meaningful agent capabilities, allowing Siri and other tools to perform tasks on behalf of users. Furthermore, they stressed that Apple is uniquely positioned to offer these features and “may be the only company that can do it soon.”
Morgan Stanley favors Nvidia, Broadcom, AMD downgrades
Meanwhile, Morgan Stanley downgraded artificial intelligence chip maker Advanced Micro Devices (NASDAQ: ) to “equal” from “overweight” on Monday.
While the bank still supports the overall narrative, it believes investor expectations for AMD’s artificial intelligence business are too high. Morgan Stanley analysts believe that despite a recovery in core business, current artificial intelligence expectations do not leave much room for upside.
“We believe the upside correction potential for AI is limited,” the analysts wrote.
Additionally, Morgan Stanley notes that AMD’s stock price appears expensive compared with other large AI companies (NASDAQ: ) and Broadcom (NASDAQ: ), and the bank has an upgrade on AI Predictions are more confident.
Despite the downgrade, Morgan Stanley analysts still view AMD’s product lineup as a strong competitor in the client and server CPU markets this year.
Melius downgrades Adobe as enterprise software faces AI challenges
Earlier this week, Melius analysts downgraded Adobe (NASDAQ:) stock to “hold” from “buy” with a price target of $510.
The investment firm noted that the enterprise application software industry is facing challenges from artificial intelligence, similar to how local hardware companies were affected by the shift to the cloud in the 2010s. They think the trend may last longer than expected.
Melius stressed that artificial intelligence, powered by companies like Nvidia and major cloud platforms, will accelerate software creation, customization and deployment. Additionally, coding tools make it easier for smaller AI-first competitors to emerge.
They also point out that most SaaS companies have been raising prices for years, making it harder to charge extra for AI, and that AI-driven productivity could upend the traditional “seat model” business approach, suggesting that business models may be change.
“Additionally, as unstructured data grows in importance and availability, we see AI as a disruptor to traditional databases,” Melius analysts said. “In short, you can see the impact of AI on Snowflake ( The impact on Oracle (NYSE: ) , which has even a partial hold rating, and ongoing impacts on Salesforce (NYSE: ) and Workday (NASDAQ: ) over time.
Morgan Stanley says Broadcom is ‘one of the strongest AI companies’
Ahead of a better-than-expected earnings report on Wednesday, Morgan Stanley reiterated its overweight rating on Broadcom, describing the semiconductor company as “one of the strongest artificial intelligence companies.”
The Wall Street giant pointed to several key catalysts for its positive outlook, including Broadcom’s growth prospects in artificial intelligence, potential synergies from its acquisition of VMware (NYSE: ) and the recovery of its core enterprise semiconductor business.
Analysts at the bank expect Broadcom’s artificial intelligence revenue to grow from $4.2 billion in fiscal 2023 to $14 billion in fiscal 2025, which would account for about 39% of the company’s projected semiconductor revenue.
“We expect Broadcom to easily meet, if not slightly exceed, AI targets,” the analysts noted. They believe Broadcom will benefit from the deployment of Ethernet in AI data centers, the continued growth of Google TPUs, and two new ASICs. Addition of client.
MS: Tesla can build an artificial intelligence phone
Morgan Stanley analysts say Tesla (NASDAQ:TSLA) may soon enter the smartphone market.
“The car is an extension of the phone. The phone is an extension of the car,” the Wall Street firm noted, based on discussions with auto executives and industry experts. “The line between cars and mobile phones is really blurry,” they added.
Morgan Stanley analysts have long believed Tesla has the potential to expand beyond cars into edge computing. In October, they highlighted the concept of mobile AI assistants as a major innovation.
The idea resurfaced when Tesla CEO Elon Musk said after Apple’s Worldwide Developers Conference that developing such a device was “not impossible.”
“As Mr. Musk continues to further invest in his own LLM/genAI projects, such as ‘Grok,’ the potential strategic and user experience overlap becomes more apparent,” the analysts wrote.
From an automotive perspective, supercomputing at the data center and edge levels is increasingly important. The latest Tesla vehicles are capable of over-the-air firmware updates, have batteries with the energy of about 2,000 iPhones, and are equipped with liquid-cooled inference supercomputers.
Morgan Stanley asked: “What if your phone could use the vehicle’s computing power and battery power to run AI applications?” They noted that edge computing and AI are playing an important role in combining powerful AI-driven applications with Today’s smartphone integration highlights challenges such as battery life, thermal management and latency.
“Any Tesla owner will tell you how they use their smartphone as the master key to unlock their car and run other remote applications while interacting with the vehicle,” the analyst added.
