Investing.com – Here are the analysts’ biggest artificial intelligence (AI) moves this week.
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“AI stands for Apple Intelligence”: D.A. Davidson Upgrades Apple to Buy
Analysts at asset management firm DA Davidson upgraded Apple (NASDAQ:) shares from neutral to buy this week after the iPhone maker unveiled its highly anticipated artificial intelligence strategy.
According to company analysts, “AI now stands for Apple Intelligence” is the name of the company’s artificial intelligence platform unveiled at the WWDC event.
DA Davidson also raised its price target to $230 from $200.
“Another moment between Napster and iTunes. We think yesterday’s presentation rhymes with one of Apple’s previous big moments – the transition of digital music from a standalone app with a dubious regulatory track record (like Napster) to an experience integrated into existing consumer apps (like iTunes). “- wrote the analysts.
“We believe that integrating summarization, advanced search, multimodality, text generation, and advanced photo editing into the existing ecosystem will lead to much greater adoption of AI than we have seen to date,” they added.
Analysts also highlighted that Apple was the first to introduce meaningful agent capabilities that allow Siri and other tools to perform tasks on the user’s behalf. Moreover, they emphasize that Apple is uniquely positioned to offer these capabilities and “may be the only one capable of doing so in the near future.”
AMD downgraded as Morgan Stanley favors Nvidia and Broadcom
Meanwhile, artificial intelligence chip maker Advanced Micro Devices (NASDAQ:) received a downgrade from Morgan Stanley to “equal weight” on Monday.
While the bank still supports this view, it believes investor expectations for AMD’s AI business are too high. Analysts at Morgan Stanley believe current expectations for artificial intelligence leave little room for significant growth, despite a recovery in its core business.
“Here we see limited potential for an upward revision of AI,” the analysts wrote.
Moreover, Morgan Stanley notes that AMD looks expensive compared to other large-cap AI companies such as NVIDIA Corporation (NASDAQ:) and Broadcom Inc (NASDAQ:), where the bank has more confidence in AI forecast revisions in upward side.
Despite the downgrade, Morgan Stanley analysts continue to view AMD’s product line as a strong competitor in the client and server processor markets this year.
Melius downgrades Adobe as enterprise software faces AI challenges
Earlier this week, Melius analysts downgraded Adobe (NASDAQ:) shares from Buy to Hold with a $510 price target.
The investment firm notes that the enterprise application software sector is facing AI-related challenges, drawing parallels to how the shift to the cloud in the 2010s impacted on-premises hardware companies. They suggest that this trend may continue longer than expected.
Melius emphasizes that artificial intelligence, supported by companies like Nvidia and large cloud platforms, will speed up the creation, configuration and deployment of software. Moreover, coding tools make it easier for smaller AI-focused competitors to emerge.
They also note that most SaaS companies have been raising prices for years, making it harder to charge more for AI, and AI-driven productivity could disrupt the traditional “job model” business approach, pointing to a potential shift in business -models.
“Furthermore, we see AI as a disruptor of traditional databases as unstructured data becomes increasingly important and usable,” Melius analysts said. “In short, you’ve been able to see the impact of artificial intelligence on Snowflake (NYSE:) and even the hold-rated parts of Oracle (NYSE:) for some time, as well as the ongoing impact on Salesforce (NYSE:) and Workday (NASDAQ:).
Broadcom is ‘one of the strongest plays in artificial intelligence,’ says Morgan Stanley
Ahead of Wednesday’s better-than-expected earnings report, Morgan Stanley reiterated its Outperform rating on Broadcom, calling the semiconductor company “one of the strongest names in artificial intelligence.”
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.
The bank’s analysts project Broadcom’s artificial intelligence revenues will grow from $4.2 billion in fiscal 2023 to $14 billion in fiscal 2025, representing about 39% of the company’s projected semiconductor revenues.
“We expect Broadcom to easily meet, if not slightly exceed, AI targets,” the analysts said. They believe Broadcom will benefit from deploying Ethernet in AI data centers, further ramping up Google’s TPUs, and adding two new ASIC clients.
M.S.: Tesla could create a phone with artificial intelligence
According to Morgan Stanley analysts, Tesla (NASDAQ:) may soon enter the smartphone market.
“A car is an extension of a telephone. The phone is an extension of the car,” the Wall Street firm noted, based on discussions with auto executives and industry experts. “The boundaries between car and phone are truly blurring,” they added.
Analysts at Morgan Stanley have long considered Tesla’s potential to expand into edge computing beyond vehicles. In October, they highlighted the concept of a mobile assistant with artificial intelligence as an important innovation.
The idea resurfaced when Tesla CEO Elon Musk mentioned after Apple’s WWDC that developing such a device was “out of the question.”
“As Mr. Musk continues to invest further in his own LLM/genAI projects such as Grok, the potential alignment of strategy and user experience becomes increasingly clear,” the analysts wrote.
Supercomputing, both at the data center level and at the edge, is becoming increasingly relevant from the perspective of the automotive industry. The latest Tesla vehicles, which can update firmware over-the-air, contain batteries with the energy equivalent of about 2,000 iPhones and are equipped with liquid-cooled output supercomputers.
Morgan Stanley asked, “What if your phone could tap into your car’s processing power and battery to run artificial intelligence applications?” They noted that edge computing and artificial intelligence have highlighted issues such as battery life, thermal management and latency when integrating powerful AI-based applications with modern smartphones.
“Any Tesla owner will tell you how they use their smartphone as the primary key to unlock their car, as well as run other remote apps while interacting with their vehicles,” the analysts added.