Investing.com – Here are the analysts’ biggest artificial intelligence (AI) moves this week.
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Microsoft is ‘the best way to play the AI game in our coverage,’ Truist says
Microsoft (NASDAQ:) remains the “best AI play in our review,” analysts at Truist Securities said in a note published this week.
“We believe that many of the key themes driving Microsoft’s covert activities reflect underlying trends in both our infrastructure and security efforts,” the firm said.
“In particular, we see the company’s evolving artificial intelligence strategy positioning itself as a leader in the software industry.”
While there will ultimately be multiple winners in the field of generative AI models, OpenAI is the clear leader in the LLM space, analysts say.
They argue that the first mover advantage in enterprise AI applications will be sustained due to the significant attention paid to architecture and management decisions.
Analysts continue to believe that the partnership between Microsoft and OpenAI will bring additional benefits to MSFT over other cloud service providers.
Palantir Downgraded to Sell by Monnay, Crespi and Hardt
Analysts Monness, Crespi and Hardt downgraded the rating Palantir Technologies Inc. (NYSE:) from neutral to sell with a price target of $20.
PLTR shares fell nearly 5% after the market opened Friday.
The decision follows a disappointing enterprise software revenue season and the failure of the 18-month generative AI hype cycle to generate meaningful revenue for most industry players. Analysts say the market is likely to avoid software stocks with inflated valuations.
“After rising 167% in 2023, Palantir shares were already rich heading into 2024, and with a 49% year-to-date gain, we believe valuations have now reached rock bottom,” they wrote.
While Monn believes Palantir remains well positioned to benefit from AI trends and volatile geopolitics over the long term, the firm notes that the stock’s current valuation has reached extreme levels.
Combined with pressure on the software industry and irregular revenue from government contracts, “we are headed for the darkest days of this economic quagmire,” analysts say.
Bernstein Raises AAPL Price Target: Apple ‘Can Be a Leader in AI, Not a Laggard’
Investment firm Bernstein raised its price target on Apple Inc (NASDAQ:) shares, expressing confidence that investors now see the iPhone maker “can be a leader in artificial intelligence rather than a laggard.”
The 12-month price target was increased from $195 to $240, suggesting upside potential of nearly 15% from current levels.
With more than 1 billion customers compared to ChatGPT’s 100 million, Apple has significant potential to bring AI to a wider audience, increasing everyday usefulness, Bernstein analysts said. Notably, Apple is not paying for ChatGPT, “highlighting the power it has.”
Bernstein also said investors are becoming more optimistic about the upcoming iPhone 16, expecting a robust product cycle, in part because AI features will only be available on the iPhone 15 Pro and later models.
“While we are increasingly confident that Apple will benefit from AI, we see the risk that the benefits may take longer to materialize than some bulls believe,” the analysts warned.
“Many Apple Intelligence features will be rolled out next year and will only work in English, potentially resulting in some updates in the iPhone 17 cycle,” they added.
Wedbush raises Micron PT price to $170 ahead of earnings report
Earlier this week, analysts at Wedbush Securities reiterated a Buy rating on memory chip maker Micron Technology Inc (NASDAQ:) and raised their price target from $130 to $170 ahead of the company’s earnings report next week.
“In our view, the main issue with MU is that history shows that the stock is expensive relative to its asset level,” the firm’s analysts said in a note.
Analysts acknowledge that while the memory industry remains cyclical, they believe supply will remain tight through this year and likely through much of 2025. This is due to a lack of new investment in NAND and DDR5, due in part to increased capacity requirements for high-bandwidth memory. (HBM).
“As such, we believe average selling prices (ASP), revenue, margins and earnings per share will rise cyclically, with book value also rising as free cash flow flows into MU’s balance sheet,” they noted.
“We expect nothing but positive news on MU’s financial performance for some time and expect the stock to continue to rise until we see a change in the industry’s investment plans.”
Rosenblatt: Adeia is ‘the most underrated AI game on the market’
Rosenblatt Securities said intellectual property (IP) licensing company Adeia Inc (NASDAQ:) is “the most undervalued AI company in the market,” reiterating a Buy rating on the stock.
After discussions with Adeia’s CEO, CFO and VP of Investor Relations, Rosenblatt emphasized the company’s “under the radar” status despite its leadership in key AI growth sectors.
The firm’s analysts highlighted the significant opportunity in semiconductors, noting that the limitations of transistors are bringing Moore’s Law to an end. “Adeia’s hybrid interconnect and chiplet IP offer a solution” to these problems, they noted.
In the media sector, Rosenblatt recognized Adeia as “an IP technology leader in digital entertainment,” which positions it well for the continued growth of video across devices.
On the financial front, Rosenblatt praised Adeia’s “over 60% operating margin” and its valuation.
“We believe Adeia is the most undervalued AI development on the market,” they emphasized. “We encourage investors to take a closer look at the company.”