Investing.com – Here are the biggest artificial intelligence (AI) analyst moves this week.
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Bank of America downgrades Tesla's rating due to high execution risk
Earlier this week, Bank of America downgraded Tesla (NASDAQ:) to Neutral from Buy, while raising its price target to $490 from $400.
Analysts cited high execution risk as the main reason behind the downgrade, noting that the current valuation already reflects much of Tesla's long-term potential across its core auto, robotaxis, Optimus and energy businesses.
Bank of America analysts, led by John Murphy, see Tesla's robotaxi service as its biggest opportunity, accounting for nearly 50% of its value. The service, expected to launch in 2025, could be worth $420 billion in the United States and more than $800 billion globally.
Initially, Tesla is expected to own and operate the fleet, with third-party providers joining later. While the rollout may start slowly as per-mile costs rise, Tesla's lack of drivers provides a significant cost advantage over competitors like Uber (NYSE:) and Lyft (Nasdaq:).
Tesla's Full Self-Driving (FSD) technology also has a significant value of $480 billion.
Bank of America projects that 23 million vehicles could feature FSD by 2030, rising to 75 million by 2040, generating significant EBIT with higher margins than the core auto segment. Analysts point out that this assessment does not yet include potential licensing opportunities with other automakers.
Potential upcoming catalysts for Tesla include launching a lower-cost model in early 2025, a new model later that year, launching a Robotaxi by mid-2025, and expanding Megapack production in Shanghai in the first quarter of 2025.
Additional drivers include updates to FSD subscriptions, progress on the Optimus humanoid robot targeting 1,000 units by the end of 2025, and potential risks from unfavorable policy changes.
AMD's rating was downgraded at HSBC, and its price target was cut
HSBC analysts downgraded Advanced Micro Devices (NASDAQ:) shares to downgrade from buy on Wednesday and cut their price target to $110 from $200, citing concerns about AMD's AI GPU roadmap, which analysts see as less competitive.
Analysts cited challenges to AMD's ability to gain traction in the GPU AI market, citing tepid demand for the company's MI325 GPU and potential delays in product deliveries to Nvidia's (NASDAQ:) rival NVL platform.
For this reason, HSBC lowered its forecast for AMD GPU AI revenue in fiscal year 2025 (FY25) to $8.1 billion, down from $12.3 billion, well below the consensus estimate of $9.5 billion.
“AMD’s share price has corrected 24% in the past three months but we believe there is still more to fall,” HSBC analyst Frank Lee wrote in a note. “We believe that AMD will not be able to penetrate the AI GPU market to the extent we previously expected.”
HSBC expects AMD to launch its MI350 chip in the latter half of 2025, in line with its schedule. However, analysts do not expect to deliver an AI rack solution capable of competing with Nvidia's NVL rack platform until late 2025 or early 2026, in line with the planned launch of AMD's MI400 chip.
The downgrade also reflects concerns about AMD's slowing momentum in its customer businesses and limited growth potential for non-AI data center revenue in FY25.
Needham's 2025 Salesforce Top Pick
Needham & Company Names Salesforce Inc (NYSE:) a 2025 Top Pick in Enterprise programming (ETR:) by adding the stock to its condemnation list.
In a note on Wednesday, the company raised its price target on Salesforce from $375 to $400, driven by optimism around the company's Agentforce (AF) strategy.
“CRM is our top choice for 2025 in our enterprise software world,” Needham said, emphasizing confidence in Salesforce's ability to implement and monetize its new initiative. The company highlighted that Agentforce is now a critical component of nearly half of enterprise customer deals, indicating its growing importance within the Salesforce ecosystem.
“AF is an active component in nearly half of enterprise client-sized deals,” the analysts said. While initial deal sizes are still small, Needham expects a significant increase in the second half of the year if the pilot programs prove successful.
AI plays a central role in Salesforce's strategy, with rapid hiring of AI-focused sales representatives expected to drive second-half bookings. “The hiring process for AI-focused salespeople is moving quickly, which should help with bookings within two hours,” Needham continued.
The company also pointed to Agentforce's “halo effect,” which has become increasingly apparent. Products like Mulesoft are expected to benefit greatly from wider adoption of Agentforce.
“The Halo effect is now real, and Mulesoft will likely benefit more than other CRM products,” the memo added.
From a valuation standpoint, Needham sees Salesforce as attractive, trading at 24 times FY26 free cash flow estimates. The company expects 20% FCF growth in FY26, which supports its bullish outlook for the stock.
2025 is the year of a major shift in AI adoption: Evercore ISI
Evercore ISI sees 2025 as a pivotal year for widespread AI adoption, though enthusiasm for the burgeoning technology is already building across industries.
While corporate earnings calls increasingly reference AI, capital spending by large scalers remains strong, interest in AI technologies, as measured by searches on Google (NASDAQ:), has reached record levels, and actual implementation has lagged. .
“With consumers eager to adopt AI and sentiment in corporate America relatively subdued, 2025 is the year of a critical shift in AI adoption,” Evercore strategists led by Julian Emanuel wrote in a note on Sunday.
AI capabilities have evolved dramatically, moving beyond chatbots to automating complex physical and digital tasks. In 2024, productive AI has spurred advances in robotics, autonomous digital agents, and manufacturing tools.
These advances, rooted in improvements in temporal reasoning, communications, and training data, enable AI systems to “think” before they act, representing a major shift in functionality.
While AI-driven innovation continues, investor sentiment turned cautious in mid-2024, leading to the first significant pullback in AI-exposed stocks since the launch of ChatGPT.
The company believes that artificial intelligence will fundamentally reshape skilled work and address labor shortages.
Evercore identifies the key players in the AI ecosystem as “enablers, adopters, and adapters,” emphasizing their importance in portfolio strategies for 2025. These companies are expected to play a central role in driving enterprise adoption as companies increasingly look to AI As it is necessary to maintain its competitiveness.
“We believe that 2025 will attract more participants to the ‘AI revolution’ as advances in technology and its applications make AI ‘essential’ to companies’ ability to compete effectively in the years ahead,” Emanuel and his team wrote.
Analysts maintain confidence in the transformative impact of artificial intelligence, and expect the S&P 500 to reach 6,800 points by the end of the year.
Deutsche Bank Is reducing Adobe stock over AI monetization concerns
Also this week, Deutsche Bank downgraded Adobe (NASDAQ:) to Hold from Buy, citing a lack of clear financial benefits from its AI-powered text-to-image technology.
The analysts, led by Brad Zelnick, expect Adobe stock to remain “range-bound” until the company shows more tangible progress in monetizing its AI capabilities.
The reduction comes on the heels of a slowdown in Adobe's annual net recurring revenue, which slowed for the third year in a row. Wall Street forecasts indicate that this trend may continue in the current fiscal year.
While analysts believe Adobe will eventually succeed in monetizing generative AI, they note that “it will take some time for this to become apparent in the company's disclosure and/or financial statements.”
In December, Adobe issued a full-year revenue forecast of $23.30 billion to $23.55 billion, below analysts' average estimate of $23.78 billion, according to LSEG data. The outlook prompted several brokerages to lower their price targets for the stock, although Adobe management expressed confidence in stronger growth during the second half of the year.
Adobe is investing heavily in AI-driven tools, like its Firefly offering, to compete with emerging competitors like Stability AI, Midjourney, and OpenAI's Sora. However, Deutsche Bank (ETR:) analysts remain cautious, saying they are “moving to the margins” until Adobe's AI efforts translate into clearer financial performance.
