Investing.com – Here are the biggest artificial intelligence (AI) analyst moves this week.
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Nvidia Stock Remains Top Pick for 2025: MS
Morgan Stanley (NYSE:) reaffirmed Nvidia (NASDAQ:) as its top stock pick for 2025, maintaining an Overweight rating and $166 price target.
Despite some near-term headwinds, including a slowdown in Hopper construction and intermittent availability of the Blackwell product, Morgan Stanley views these challenges as temporary.
The company's analysts stressed that by the second half of 2025, Blackwell's strength will be “the only issue.”
In the face of competitive pressures from ASIC solutions, especially from Marvell (NASDAQ:) and Broadcom (NASDAQ:), Morgan Stanley believes purchasing trends will favor GPUs over time.
“While our forecasts for both AVGO/MRVL ASIC revenues are largely conservative, as are our GPU forecasts, we believe GPUs will significantly outperform ASICs this year,” the analysts noted.
The report also highlights Nvidia's $12 billion annual R&D investment as essential to maintaining its leadership in AI hardware and system-level innovations.
Analysts also addressed concerns about industry challenges, including scaling artificial general intelligence (AGI) suites.
While technology experts call for larger AI systems, financial backers remain cautious about return on investment (ROI). Nvidia innovations, such as Mellanox (NASDAQ:) and NV-Link, are positioned to improve efficiency in this area.
Nvidia's growth drivers — including inference, sovereign AI training, and enterprise applications — account for 70% of its data center revenue. Analysts believe these sectors will continue to drive growth even in the face of potential industry consolidation by 2026. “Even with some consolidation in the arms race, we have yet to see lasting growth potential,” they commented.
The upcoming Consumer Electronics Show (CES) in January 2025 is expected to boost sentiment toward Nvidia. Analysts expect messaging to focus on strong demand for Blackwell, albeit with supply constraints.
“By mid-year, we remain comfortable that the focus will remain on Blackwell which will be the driving force behind 2-hour revenue, potentially unlocking a more significant upside,” the note concluded.
Tesla stock remains “the king of narratives,” Barclays says.
Tesla (NASDAQ:) has seen an extraordinary rise since the US elections, cementing its position as the market's “king of narratives,” according to analysts at Barclays (line:).
The electric vehicle (EV) maker's shares rose nearly 90%, adding about $730 billion to its market value — a feat matched only by a few tech giants like Nvidia and Apple (NASDAQ:).
Barclays notes that this performance is particularly notable given the stock's clear disconnect from underlying fundamentals. Tesla's price-to-earnings (P/E) ratio has risen from 80 times before the election to a high of 145 times based on consensus 2025 EPS estimates.
“The disconnect from fundamentals in many ways mirrors the rally we saw from Tesla in 2020-2021,” analysts led by Dan Levy said in a note.
They attribute this rise to Tesla's “amplification of narrative leadership,” which centers around topics such as autonomous vehicles (AV) and artificial intelligence.
Another factor contributing to the rally is the Tesla Financial Complex, where options activity amplifies stock movements. Furthermore, retail investor interest remains strong, with 30% of Tesla's outstanding shares held by individual investors, according to Barclays.
“Tesla remains the 'OG meme stock,'” the analysts stressed.
Barclays also noted the growth of the “Elon premium” in Tesla's valuation. The growing importance of CEO Elon Musk has led to increased interest in the company, which has increased enthusiasm for Tesla shares.
Micron downgraded Bank of America after disappointing guidance
Bank of America (BofA) downgraded Micron Technology (NASDAQ:) to Neutral from Buy, citing a weaker-than-expected gross margin outlook for the fiscal second and third quarters.
Shares of the chipmaker fell sharply on Thursday after providing disappointing guidance for the second quarter. Micron expects second-quarter revenue to be about $7.9 billion, which misses Bank of America's estimate of $8.3 billion and the consensus forecast of $9 billion. The company also expects GM for the second quarter to be 38.5%, below Bank of America's estimate of 40% and the consensus of 41%.
“Data center and HBM trends remain strong but weakness in PC and phone markets is putting downward pressure on memory prices, especially in NAND,” Bank of America analysts led by Vivek Arya noted. Ongoing pricing challenges in NAND are expected to extend into the third quarter.
Although Bank of America remains optimistic about Micron's position in the high-bandwidth memory (HBM) and AI markets, it cut its preliminary financials per-share estimates for 2025 and 2026 by 5% and 11%, respectively, to $6.80 and $8.78. dollar. The stock's price target was also lowered to $110 from $125.
“Historically, the stock has struggled to outperform when GM's expansion remains weak, which resulted in us downgrading our stock to Neutral from Buy, although we remain positive about MU's position in the HBM/AI market as TAM+20 is raised.” % for CY25 to $30 billion.
While data center and HBM trends were highlighted as strong, weakness in the PC and mobile markets continues to weigh on memory prices, especially NAND. However, Bank of America sees potential for recovery in these markets in the latter half of 2025.
Oracle takes a valuation cut and capex concerns
Monness, Crespi and Hardt downgraded Oracle (NYSE:) stock to Sell from Neutral, and set a 12-month price target of $130, implying an upside of more than 22% from current levels.
The company has raised concerns about Oracle's valuation, increasing competition, and aggressive capital spending plans.
Oracle shares are up 60% year to date, driven largely by production enthusiasm for artificial intelligence, posting their best performance since 1999. However, Moness analysts cautioned that “valuation is stretched, competition is fierce, software is in transition, and the environment… “The kidney is fragile.” “
The company noted that Oracle's recent earnings in the second quarter highlighted growth challenges. FY25 EPS estimates of $6.17 remain unchanged, while FY25 cloud revenue forecasts have been revised to $24.9 billion, down from last year's forecast of $25.4 billion.
Monis expressed particular concern about Oracle's “aggressive capital expenditure plans,” with spending expected to double in FY25.
“Our current FY:25 capex forecast of $14.2 billion represents 24.6% of revenue, up from 13% in FY:24, and well above the 27-year average of 4%,” the analysts wrote.
They argue that this level of spending is unsustainable, dragging Oracle's free cash flow (FCF) margin to an estimated 8% for FY25, well below its historical average of 28%.
The company also pointed to Oracle's highly leveraged balance sheet, with debt of $88.6 billion and a debt-to-equity ratio of 86%. This limits the company's ability to enhance shareholder returns through dividends or buybacks and limits its ability to make acquisitions or broader organic growth investments.
While Oracle has seen early success in generative AI, Monis warned that the “inevitable shakeout in the LLM industry” and intensifying competition from large cloud providers could pose significant risks.
“We trust in AI,” says Bank of America, highlights 6 chip stocks for 2025
Bank of America set its 2025 semiconductor outlook on Monday, highlighting six chip stocks it recommends for investors in the coming year.
The bank expects a 15% increase in semiconductor industry sales to $725 billion in 2025. This growth, although strong, is expected to be slower compared to the 20% growth witnessed this year.
Bank of America expects memory sales to rise 20% in 2025, after a 79% year-over-year increase in 2024, with core semiconductors, excluding memory, expected to grow 13%.
“We view 2025 as a year of two different trends. In the first half, AI investments and NVDA Blackwell deployments driven by US cloud customers maintained momentum in the AI semis,” analysts led by Vivek Arya said in a note.
“However, in the second half (H2), attention could shift to less busy industrial/automotive chipmakers on inventory replenishment and a rebound in auto production assuming a global economic recovery.”
BofA's top picks include leading AI companies like Nvidia, Broadcom, and Marvell Technology.
The analysts said: “We continue to trust artificial intelligence…at least until 2:30.”
Furthermore, the company has identified Lam Research (NASDAQ:) as a leading flash memory instrument company poised to recover capital expenditures and resolve impacts in China.
Leader of cars and electric vehicles On semiconductors (NASDAQ:) was highlighted for its potential cyclical rebound in the second half of 2025, and Cadence Design Systems (NASDAQ:) stood out for its resilient double-digit growth, especially as the AI hardware cycle slowed in the latter half of the year.
