Investing.com – Here are the analysts’ biggest artificial intelligence (AI) moves this week.
InvestingPro subscribers are always the first to receive market-moving AI analyst commentary. Update Today!
Wall Street expects another strong report from Microsoft, winner in artificial intelligence
Microsoft (NASDAQ:) is scheduled to release its earnings report on April 25, with Wall Street unanimously forecasting the tech giant to report earnings per share (EPS) of $2.83 and revenue of $60.77 billion.
Meanwhile, Bank of America analysts expect Microsoft’s revenue to rise significantly by 1% compared to their estimate of $60.5 billion in the third quarter for Microsoft, which would equate to 14.5% year-over-year growth, or 14% on a constant basis. currency.
Excluding Activision, growth is projected to be 11% year over year in constant currency, “driven by strong growth in Azure and M365,” according to BofA.
“We expect growth of 1% compared to our Azure growth estimate of 28.0% cc, given positive feedback from system integrator partners suggesting (1) a stable and healthy migration of new workloads to the cloud platform; (2) the relative strength of the Microsoft security stack; and (3) expanding the use of Azure AI and data services such as Open AI Services, Azure AI and Fabric,” it said.
At the same time, Evercore ISI analysts forecast Azure growth at 28% in constant currency in the current quarter.
They also see potential for even greater growth as AI-powered consumption increases. Evercore believes that achieving Azure’s 30% growth rate is feasible, provided the necessary additional investments are made.
“We think anything in the 29-30% range is pretty good, and anything in the 30% or more range is definitely positive, even though MSFT is a crowded long position,” they said.
“The focus will be on the impact of AI on Azure (up about 6 points last quarter) and any sense of whether the non-AI consumption business stabilizes,” Evercore analysts added.
Lynx: Apple’s AI strategy is more advanced than the Street thinks
Analysts at Lynx Equity Strategies said Monday that Apple’s (NASDAQ:) artificial intelligence strategy is “much more advanced than the Street believes.”
The research firm reiterated its $220 price target on AAPL shares, saying it remains optimistic about its prospects based on forecasts that iPhone and overall revenue will see modest growth this fiscal year.
The Lynx analysts’ comments come after recent data showed iPhone shipments fell 10% year-on-year in the first quarter, while overall iPhone sales rose 7.6% in the period.
As a result, the iPhone division’s share fell to 17%, down from 20.6% in the year-ago quarter.
“Sounds bad, right? However, the report should not come as a surprise to investors. The report may even be positive for the stock,” Lynx analysts said.
“IDC’s estimate of a 10% decline in iPhone sales should bring a sigh of relief in the context of dismal media headlines that sales of Chinese units have declined by double digits,” they added. “Many investors seem to be confusing iPhone performance in China with global iPhone sales.”
Lynx previously said iPhone weakness in the first quarter could be due to “peculiar manufacturing logistics” rather than demand disruptions.
The firm believes iPhone production will recover in the second quarter or may have already started recovering last month.
Tesla’s earnings report could be ‘one of the most important moments in the company’s history’ – Wedbush
Tesla (NASDAQ:) is set to report its latest earnings report next week, and the conference call could be “one of the most important moments in the company’s history,” Wedbush analysts said, as the automaker faces a “moment of truth.”
“While we’ve seen much shakier times in Tesla’s history, dating back to 2015, 2018, 2020… this time is clearly a little different, as for the first time many longtime Tesla supporters are abandoning the story and throwing in the white towel,” the firm wrote.
This change in sentiment is due to a significant misjudgment of weaker demand in China, which has negatively impacted Tesla’s optimistic outlook, Wedbush said.
Moreover, analysts also highlighted that internal debate over the priority of the Model 2 project or the Robotaxi project, significant layoffs, including of key personnel, and intense competition in the global electric vehicle (EV) market have turned Tesla’s narrative “from a Cinderella story to a horror show ” soon”.
To change this, Wedbush’s team believes Tesla and Elon Musk should discuss several important issues in the upcoming conference call, including clarifying their AI initiatives and ownership issues, and declaring an AI day to set strategy and monetization, among other things.
Loop Capital’s SMCI price target more than doubled
Earlier this week, analysts at Loop Capital more than doubled their 12-month price target for Super Micro Computer (NASDAQ:) shares to $1,500 from $600, while maintaining a Buy rating on the artificial intelligence server maker.
“We are raising our price to $1,500 as we continue to build confidence in our bullish position in the Gen AI (LT) and SMCI server industry as a growing leader in need of both complexity and scale,” the analysts wrote.
“We believe (P/E) valuation will remain a topic of conversation and believe that if our fundamental thesis makes sense, then a P/E multiple of 20-30x is feasible.”
Analysts say SMCI’s inclusion in the S&P 500 has prompted frequent discussions with large long-term investors, both existing holders and newcomers, who agree that a P/E ratio of 20x to 30x is warranted for a company at the forefront of a structural crisis. assembly similar to generative artificial intelligence.
Piper Sandler starts Reddit overweight coverage
Meanwhile, also this week, analysts at Piper Sandler initiated coverage of Reddit (NYSE:) shares with an Outperform rating and a $50.00 price target.
The brokerage notes that RDDT is an emerging player in the artificial intelligence space, highlighting the value of its vast data set, which currently generates revenue through data licensing (DL).
This revenue stream, estimated to be worth approximately $66 million by 2024, shows potential for growth and stability, according to analysts.
“We see two key points: i) we expect the number of DL customers to grow in future years (no growth currently being modeled); and ii) it implies likely upside to our FY24 revenue forecast of ~$980 million (+22%) if advertising growth remains stable,” the analysts said.