Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
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Bank of America upgrades Apple
Apple Inc (NASDAQ:AAPL) is likely to feel a boost from AI and Vision Pro devices, according to Bank of America analysts. The analysts also sees an end to negative EPS estimate revisions.
As a result, the analysts raised the rating on AAPL stock to Buy from Neutral with the price target raised to $225 per share.
“We upgrade Apple to Buy from Neutral, given: 1) stronger multi-year iPhone upgrade cycle driven by need for the latest hardware to enable Generative AI features to be introduced in 2024/2025 (large part of installed base still on iPhone 11), 2) higher growth in Services as Apple better monetizes its installed base (see our deep dive), 3) silicon roadmap to morph from PC to Servers to Autonomous, driving higher margins…”
“4) capital returns strong (buybacks, dividend) even post approaching net cash neutral, 5) GM stable to higher over time (mix, price, vertical integration), 6) AAPL remains underweighted vs. S&P500 (Fig 13, 14) and anticipation of AI features could induce institutional investors to increase positions, 7) risk around legal issues is manageable, and 8) recent relative underperformance suggests many risks baked into expectations.”
IBM raised at Evercore ISI
Analysts at Evercore ISI raised the rating on International Business Machines (NYSE:IBM) stock to Outperform.
“We think as Enterprises look to deploy AI tools to enhance productivity – the process will be complicated and messy, furthermore we think data security and not running enterprise data on public LLM models will be a key focus – IBM with their unique set of consulting and software assets can help solve this bottleneck and enable enterprise customers to deploy AI tools on and off premise more seamlessly,” analysts said.
The new price target on IBM stock is $200 per share.
Analyst love affair with chipmakers continues
Citi analysts moved Marvell Technology Inc (NASDAQ:MRVL) to Top Pick, citing several AI-linked tailwinds.
“We like the stock setup in 2024 on continued AI optics growth, layering of custom ASIC AI project sales, and bottoming out of non-cloud markets like enterprise networking and carrier,” analysts said.
Similarly, Goldman Sachs analysts reinstated Broadcom Inc (NASDAQ:AVGO) at Buy. Among other things, Hari expects “strong double-digit revenue growth in the company’s AI-related businesses (i.e. high-speed Networking and custom compute).”
Elsewhere, Canaccord Genuity analysts bumped his price target on Qualcomm Incorporated (NASDAQ:QCOM) stock.
“With on-device generative AI, a strong product roadmap, improving cost discipline, and improving Android smartphone inventory levels, we anticipate reaccelerating revenue and EPS growth in F2024 and F2025.”
Dell has more room to run - Bernstein
Despite achieving a strong 62% relative outperformance in 2023, Bernstein’s positive stance on Dell Technologies Inc (NYSE:DELL) remains intact. Analysts reaffirmed an Outperform rating with a $90 price target.
“We see Dell as a best-in-class operator with structural advantages, including its direct distribution model, scale and corporate relationships and strong free cash flow conversion.”
Moreover, the analyst sees “AI servers as a key incremental revenue opportunity for Dell. We believe that Dell can achieve #3B+ in incremental YoY AI server growth, if current levels of order activity continue over the next 2 quarters.”
Baidu ‘best AI play in China’ - Morgan Stanley
Morgan Stanley analysts project a 7% year-over-year increase in core revenue for Baidu Inc (NASDAQ:BIDU), with ads experiencing a 6% YoY uptick in the context of a subdued macro environment for the fourth quarter.
Cloud growth is expected to surge by 10% YoY, attributed to additional contributions from AI. Foreseeing a 10% YoY rise in core non-GAAP operating profit, analysts anticipate stable margins through disciplined cost management.
“We see it as best AI play in China,” analysts said in a note.
