5 Big Analyst AI Moves: Why Microsoft Is the Clear-Cut Winner in AI and AMD Gets an Upgrade

 

5 Big Analyst AI Moves: Why Microsoft Is the Clear-Cut Winner in AI and AMD Gets an Upgrade

1. Microsoft: A Clear-Cut Winner in AI

Microsoft (MSFT) received a glowing endorsement from Morgan Stanley analyst Keith Weiss, who raised his price target on the stock from $260 to $285 and reiterated his overweight rating. Weiss said that Microsoft is a “clear-cut winner in AI”, as it leverages its cloud platform Azure, its productivity suite Office 365, and its gaming and social media assets to create a “comprehensive and differentiated AI offering”.

Weiss also praised Microsoft’s strong execution, innovation, and growth, and said that the company has a “large and expanding” total addressable market in AI, estimated at $800 billion by 2025. He added that Microsoft’s AI revenue could grow by 24% annually over the next five years, reaching $110 billion by 2025, and accounting for 45% of its total revenue.

Microsoft’s stock rose by 3.7% on Monday, following Weiss’s bullish note, and closed at $232.33, near its all-time high of $232.86.

2. AMD: Upgraded to Buy on Strong AI Growth

AMD (AMD) got a boost from Cowen analyst Matthew Ramsay, who upgraded his rating on the stock from market perform to outperform and raised his price target from $90 to $110. Ramsay said that AMD is well-positioned to benefit from the strong demand for AI chips in the data center and edge computing markets, as well as the gaming and PC markets.

Ramsay also said that AMD has a “unique and sustainable” competitive advantage over its rivals, such as Intel (INTC) and Nvidia (NVDA), as it offers a “full-stack solution” that integrates its CPU and GPU technologies. He added that AMD’s AI revenue could grow by 37% annually over the next five years, reaching $21 billion by 2025, and accounting for 40% of its total revenue.

AMD’s stock rose by 1.8% on Tuesday, following Ramsay’s positive note, and closed at $94.71, near its 52-week high of $99.23.

3. Nvidia: Downgraded to Hold on Valuation Concerns

Nvidia (NVDA) faced some headwinds from BMO Capital analyst Ambrish Srivastava, who downgraded his rating on the stock from buy to hold and lowered his price target from $650 to $600. Srivastava said that Nvidia’s valuation is “stretched” and “hard to justify”, as the stock trades at a premium to its peers and the market.

Srivastava also said that Nvidia’s growth prospects are “already well understood and appreciated” by the investors, and that there are some risks and uncertainties that could limit its upside potential. Some of these risks include the regulatory hurdles and competitive pressures for its proposed acquisition of Arm, the potential slowdown in the gaming and cryptocurrency markets, and the increasing competition from AMD and Intel in the AI space.

Nvidia’s stock fell by 2.7% on Wednesday, following Srivastava’s bearish note, and closed at $522.49, below its 52-week high of $614.90.

4. IBM: Mixed Reactions on AI Strategy

IBM (IBM) received mixed reactions from analysts after it announced its fourth-quarter earnings and its new AI strategy on Thursday. IBM reported a revenue decline of 6.5% year-over-year, missing the expectations, and a earnings per share of $2.07, beating the estimates. IBM also said that it will focus on growing its cloud and AI businesses, and that it will spin off its managed infrastructure services unit into a separate company by the end of 2021.

Some analysts were optimistic about IBM’s AI strategy, saying that it will help the company to improve its profitability, innovation, and growth. For example, Wedbush analyst Moshe Katri said that IBM’s AI initiatives, such as Watson, Red Hat, and hybrid cloud, will enable the company to “better monetize its massive installed base” and to “participate in some of the fastest growing segments” of the tech industry.

Other analysts were skeptical about IBM’s AI strategy, saying that it will not be enough to overcome its structural challenges, legacy issues, and competitive disadvantages. For example, UBS analyst David Vogt said that IBM’s AI efforts, such as Watson, have “failed to live up to the hype” and that the company is “lagging behind” its peers in the cloud and AI markets.

IBM’s stock fell by 9.9% on Friday, following its earnings report and AI strategy announcement, and closed at $118.61, near its 52-week low of $90.56.

5. Salesforce: Upgraded to Buy on AI Leadership

Salesforce (CRM) got a lift from Jefferies analyst Brent Thill, who upgraded his rating on the stock from hold to buy and raised his price target from $250 to $300. Thill said that Salesforce is a “leader in AI”, as it leverages its cloud platform, its customer relationship management (CRM) software, and its recent acquisitions, such as Tableau and Slack, to deliver “best-in-class AI solutions” to its clients.

Thill also said that Salesforce has a “robust and diversified” revenue stream, a “loyal and growing” customer base, and a “strong and visionary” management team. He added that Salesforce’s AI revenue could grow by 25% annually over the next five years, reaching $35 billion by 2025, and accounting for 50% of its total revenue.

Salesforce’s stock rose by 2.6% on Friday, following Thill’s upbeat note, and closed at $225.95, below its 52-week high of $284.50.

These are the 5 big analyst AI moves that happened in the past week, and how they affect the outlook and valuation of Microsoft, AMD, and other AI-related companies. To stay updated on the latest AI news and analysis, subscribe to our newsletter and follow us on social media.

Sources:

• Microsoft a ‘clear-cut’ winner in artificial intelligence, Morgan Stanley says
• AMD Stock Upgraded at Cowen on Strong AI Growth
• Nvidia Stock Slips As BMO Capital Downgrades On Valuation Concerns
• IBM Earnings: What Happened
• Salesforce Stock Upgraded at Jefferies on AI Leadership