5 Big Analyst AI Moves: Why Microsoft Is
the Clear-Cut Winner in AI and AMD Gets an Upgrade
Artificial intelligence (AI) is one of the hottest topics in the tech industry, and analysts are constantly updating their ratings and forecasts for the leading players in this field. In this article, we will review 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.
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
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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