Investing.com – Here are the analysts’ biggest artificial intelligence (AI) moves this week.
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RBC raises Microsoft target price as AI remains one of key drivers
Analysts at investment bank RBC Capital Markets raised their target price for Microsoft (NASDAQ:) shares from $450 to $500 on Friday, citing positive feedback from their recent investor meetings with Microsoft’s investor relations directors.
RBC emphasized that artificial intelligence remains a key growth driver for Microsoft, emphasizing that the technology giant continues to make significant investments in this rapidly developing sector.
“While capital expenditures will likely continue to increase and impact margins, Microsoft is following demand signals while focusing on lowering the cost curve,” analysts wrote in a note.
“Advances like GPT-4o, which is more efficient, and Maia (custom silicon for artificial intelligence) will help lower the cost curve,” they added.
RBC also noted Microsoft’s expertise in cloud services as a key advantage in providing a unified architecture for all AI workloads.
Moreover, RBC noted that while Microsoft’s core cloud business is still in its early stages, there is a clear trend toward companies moving more workloads to the cloud.
They noted that Azure’s growth, excluding AI, accelerated in the fiscal second quarter.
“Importantly, Azure Core benefits from the broader AI roadmap, as one-third of Azure AI’s 50,000+ customers are new to Azure,” the analysts noted.
M.S.: Dell remains the best way to increase the pace of development of artificial intelligence servers
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During the week, Morgan Stanley analysts again named Dell Technologies (NYSE:) their top pick and raised their 12-month price target for the tech stock to $152 from $128.
“Even after the T12M Index’s over 100% rally, DELL shares are trading at just 13 times our new FY26 EPS of $10.12 (18% above the Street) and remain the best way to play 1) increasing the growth rate of AI servers, 2) changing demand for storage and 3) improving the MKT PC,” analysts say.
In their note, the analysts noted Dell’s strong momentum over the past four weeks, which they attributed to competitive wins in AI server contracts with Tier 2 cloud service providers (CSPs), additional orders for enterprise AI servers and increased storage demand. .
As a result, the tech company now boasts its strongest future spending intentions in six years.
“We believe the large Tier 2 CSP win mentioned above could equate to a $2 billion order this quarter, meaning the AI backlog at the end of the April quarter would be just under $4 billion and potentially higher if we assume “Takes into account smaller wins for businesses, excluding any significant changes in turnover figures in the April quarter,” they added.
Investors are increasingly hesitant to own AMD shares, says Mizuho analyst
Investors are increasingly reluctant to own AMD (NASDAQ:) shares, analyst Mizuho noted in a new note.
“Why add AMD when I have NVDA and AVGO, which are cheaper and much less risk?” According to the analyst, this appears to be a key factor of resistance among market participants.
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The company’s shares rose to a new intraday high of $168 earlier this week, but there were no specific company-related events that could explain the rise. According to the analyst, it appears that the short squeeze has affected most of the technology market.
Meanwhile, AMD, which has become one of the darlings of AI over the past year or so thanks to its powerful AI-focused GPUs, remains a significant short position for many East Coast hedge funds, with numerous long-only investors ( LO), avoided According to Mizuho, this will happen ahead of the launch of Nvidia Blackwell later this year.
“Stoke feels like a plane crash survivor on a life raft in the middle of a vast ocean, searching for land,” the analyst wrote.
“I remain a bull and like risk reward if you have the patience and duration (think 6-9 months). But I understand the anxiety, hesitancy and anxiety among investors.”
Baidu downgrades Morgan Stanley due to slower-than-expected artificial intelligence monetization
Meanwhile, analysts at Morgan Stanley this week downgraded shares of Baidu (NASDAQ:) as they forecast challenging prospects for the Chinese internet company’s advertising revenue while monetizing its artificial intelligence projects is expected to take time.
For this reason, the Wall Street giant cut Baidu’s US-listed shares to equal weight from overweight and also cut its price target to $125 from $140.
The downward revision followed a decline in Baidu’s first-quarter profit, driven by weak economic conditions in China that weighed on its core advertising revenue.
The firm, China’s largest internet search engine, has seen some revenue growth thanks to its artificial intelligence initiatives, notably the ChatGPT-like bot Ernie, as well as AI-driven demand for its cloud services. However, this was offset by Baidu’s much higher costs for developing artificial intelligence, Morgan Stanley analysts explain.
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They believe the weakness of Baidu’s advertising division will continue, with the transformation of traditional businesses into AI offerings being “slow and lagging in terms of user retention.”
Deutsche Bank Cuts Accenture Shares, Doesn’t See GenAI as Growth Catalyst
Similarly, Irish IT services provider Accenture (NYSE:) also received a downgrade.
Notably, the Deutsche Bank analyst cut the stock from Buy to Hold and lowered its 12-month price target from $409 to $295.
According to the analyst, after Accenture’s organic revenue declined by approximately -2.5% cc in the second quarter of 2024, the company appears to have gone from steadily gaining market share, especially over the past two years, to now losing share market to its analogues. in the IT services industry under pressure.
“ACN’s outlook remains fundamentally weak and we believe further potential downward revisions to Street estimates are possible,” the analyst wrote.
“Our channel checks indicate that Gen AI will not catalyze outsized revenue growth for ACN in the near/medium term and causes disruption to existing pricing structures,” they added.
Debate over whether the AI generation could negatively impact IT service providers is expected to continue to weigh on industry metrics, potentially pushing Accenture’s valuation toward a lower, more normalized historical NTM P/E, the investment bank said.