Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
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Nvidia concerns “overblown” according to UBS
UBS analysts remain optimistic about Nvidia's (NASDAQ:NVDA) prospects in 2025, downplaying recent market concerns as "overblown." While Nvidia stock has remained relatively flat since its last earnings report, UBS is confident the company will "rise above the noise" with strong results ahead.
Investor worries have largely centered on supply chain challenges and the rollout of Blackwell server racks, but UBS analysts dismiss these concerns.
"First, we believe Blackwell chipset/compute board yields have inflected higher, and mix in both FQ4 (Jan) and FQ1 (Apr) is shifting very rapidly to Blackwell and away from Hopper,” they said in a note.
The analysts also highlighted Nvidia's revenue recognition approach. "NVDA recognizes revenue when ODMs/OEMs take title of compute boards."
This is particularly relevant as major hyperscalers are leveraging the working capital of ODMs and, in some cases, providing bridge financing for inventory. UBS believes this dynamic is aiding Nvidia in navigating supply chain complexities.
On the hardware side, UBS acknowledged some issues but pointed to improvements, particularly with connector cartridges from primary supplier Amphenol (NYSE APH). While additional enhancements are still needed in other components, UBS's Asia team reported that the overall situation is steadily improving.
Shipments of Blackwell rack systems are also on track.
“We believe rack shipments are already underway with Hon Hai (TW:2317) confirming volume shipments of GB200 rack systems commencing in 2H of January,” analysts continued.
Apple stock down this week after analyst downgrades
Apple Inc (NASDAQ:AAPL) stock fell more than 4% this week after Wall Street analysts issued downgrades for the tech giant, signaling a bearish outlook ahead of the company’s fiscal Q1 2025 earnings report.
Jefferies cut its Apple stock rating to Underperform from Hold on Monday, lowering its price target to $200.75 from $211.84.
The revision stems from expectations that Apple will miss both earnings and guidance targets, driven by weak iPhone sales and slower-than-expected adoption of AI in its upcoming iPhone models.
The analysts forecast Apple to fall short of its 5% revenue growth guidance for the first quarter, with projections of only low single-digit revenue growth in the second quarter—below consensus estimates.
Jefferies also revised its iPhone shipment forecast for Q1 FY25, shifting from a 1% growth projection to a 2% decline, citing IDC data that indicates a 4% year-over-year drop in shipments. Weak iPhone sell-through in China and muted demand for iPads and MacBooks globally further weigh on the outlook.
The downgrade also reflects concerns about Apple’s March quarter guidance, which analysts believe could disappoint investors. Jefferies noted that near-term AI prospects in smartphones remain limited, with a survey indicating that US consumers see little value in smartphone AI features.
Separately, Loop Capital also downgraded Apple, cutting its rating to Hold from Buy. Loop analysts expect "material iPhone demand reduction" starting in the March quarter and worsening in subsequent quarters.
“While the foundation of our 7/15/24 structural Buy call could still materialize, it now remains unclear on timing, and it certainly won’t be for the next nine months given we’re on the front end of 2.5 quarters of materially softening iPhone demand,” analyst Ananda Baruah remarked.
Wedbush lifts Tesla stock price target to new Street high
Meanwhile, Wedbush analysts have raised their price target on Tesla Inc (NASDAQ:TSLA) shares to $550, the highest on Wall Street, from $515. The upgrade reflects “growing confidence” in Tesla’s delivery demand outlook for 2025 and the anticipated acceleration of autonomous and AI initiatives under the Trump Administration.
“Our time spent speaking to many in the Beltway the last few weeks give us a growing confidence the Trump White House the next 4 years will be a 'total game changer' for the autonomous and AI story for Tesla and Musk over the coming years,” Wedbush analysts, led by Daniel Ives, stated.
The firm's bull case target of $650 remains unchanged.
Wedbush estimates Tesla’s AI and autonomous technology opportunities could represent a $1 trillion market, with the potential for the company’s valuation to reach $2 trillion by the end of 2025. These projections are bolstered by strong delivery demand from China and expected positive commentary during Tesla’s upcoming earnings call.
The analysts said that their price target does not include any value for Tesla’s humanoid robot, Optimus, which they believe could become “a major upside catalyst for the Tesla story.”
They also emphasized that Tesla’s Full-Self Driving (FSD) solution could achieve over 50% penetration, transforming the company’s financial model and boosting margins significantly.
“We believe Tesla remains the most undervalued AI play in the market today,” the analysts said, highlighting the growing recognition of Tesla’s AI technology as a key contributor to its valuation.
A key factor driving Wedbush’s bullish view is Tesla’s strategic positioning under the Trump Administration. The analysts believe the company is poised to benefit from a regulatory environment that is more favorable to autonomous and AI developments.
AI Agentforce could drive upside in Salesforce stock: BofA
Bank of America (NYSE:BAC) analysts see further upside for Salesforce Inc (NYSE:CRM) shares this year, supported by its new AI offering, Agentforce, and an improving spending environment.
While the stock posted strong gains of 98.5% in 2023 and 27.1% in 2024, analysts note it still trades at a discount to peers.
Salesforce is valued at 19 times its calendar year 2026 (CY26) estimated free cash flow, compared to 27 times for the Growth at a Reasonable Price (GARP) group, according to BofA.
Despite concerns over slowing growth—revenue increased 8% in the third quarter of fiscal year 2025 (FY25) versus 18% in FY23—BofA expects acceleration to 12-13% year-over-year by the second half of FY26, driven by “1) a better spending environment and 2) Agentforce,” analysts Brad Sills and Carly Liu said.
The software spending slowdown that began in mid-2022 is easing, with improved sentiment from System Integrators (SI) and software firms exceeding revenue expectations. BofA draws comparisons to post-recession trends, projecting a 1 percentage point increase to Salesforce’s committed remaining performance obligations (cRPO) growth forecast of 10% in early 2025.
Agentforce is also expected to make a meaningful impact, potentially boosting year-over-year subscription revenue growth by 2 percentage points in the latter half of FY26 under optimistic projections.
S&P 500 'will thrive in 2025' on AI boost, market research firm says
Earlier this week, economic research firm Capital Economics reaffirmed its optimistic outlook for the S&P 500 in 2025 following Donald Trump’s announcement of the Stargate joint venture (JV), a $500 billion initiative over four years to build AI infrastructure in the United States.
The JV’s key equity investors include SoftBank (TYO:9984), which will provide funding, OpenAI, overseeing operations, as well as Oracle (NYSE:ORCL) and MGX, Abu Dhabi’s AI-focused investment arm.
Trump described the venture as the "largest AI infrastructure project in history," with plans to channel investments into data centers, chip production, and power plants to strengthen the US AI ecosystem.
Capital Economics highlighted the involvement of Japan-based SoftBank as a sign of Trump's willingness to engage foreign allies in advancing America’s AI goals.
“The new president seems much less keen than his predecessor on imposing checks and balances on the spread of Al,” the firm noted.
Trump has also rolled back Biden-era executive orders, including regulations on AI development and clean energy initiatives, signaling a more relaxed approach to fostering AI growth—even at the cost of increased reliance on less environmentally friendly energy sources.
Capital Economics’ bullish stance on the S&P 500 is anchored in the expectation that the benefits of AI will quickly materialize within the index, even if they take longer to permeate the broader US economy.
The firm maintains its forecast for the index to hit 7,000 by the end of 2025, supported by Trump's pro-AI policies.
“We can't see much sign of demand for Al faltering, which is perhaps the biggest risk to our view. Indeed, plans to ramp up Al investment suggest the opposite,” the firm added.