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5 big analyst AI moves: Investors ‘struggling to understand’ Apple AI approach

Published 05/05/2024, 08:28
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Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.

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Evercore optimistic about Apple’s ‘measured approach’ to AI

On Wednesday, Evercore ISI analysts said they think that investors have been “struggling to understand” Apple's (NASDAQ:AAPL) approach to AI, particularly in contrast to rivals who have been more overtly assertive in their endeavors and investments related to this burgeoning technology.

The investment banking firm believes that AI is not an "existential threat" to Apple's operations, unlike it may be for other firms. Rather, for Apple, AI is viewed as an improvement to its existing ecosystem, serving to augment and weave together the experience for its over 2 billion iOS users.

“We think AAPL has a solid AI strategy that centers around deploying AI on the edge, the goal of this for AAPL is to make the user experience better and the ecosystem stickier, while triggering an iPhone super cycle down the road,” Evercore analysts wrote in a note.

“Apple has taken a more measured approach to generative AI compared to its big tech peers who have invested 10s of billions in infrastructure and R&D,” they added.

Analysts said Apple has been increasingly transparent about its AI strategy through detailed white papers, highlighting technological progress and edge deployment tactics. They predict that the upcoming WWDC, starting June 10th, will bring significant insights into the company’s AI projects.

Expected iOS 18 features include visual search, sophisticated photo editing, and an enhanced Siri. Moreover, Apple may allow developers to execute their AI models on iPhones and collaborate with companies like Google for cloud-based AI processing solutions.

Google is a ‘clear winner’ in AI - Mizuho

Google owner Alphabet (NASDAQ:GOOGL) is a “clear winner” in the ongoing AI revolution, a Mizuho analyst said following the company’s recent earnings report.

“The qtr was that good and enough of a positive surprise to change a lot of naysayers, skeptics, and shorts opinions in my view,” they said.

“Add in lower opex growth and messaging by mgmt. of really managing spending and investment all towards AI with moderation in other areas, you get a bullish scenario of higher rev growth and margin expansion,” added the analyst.

Google shares rose sharply following the report as the company delivered stronger-than-expected top and bottom line, announced first-ever dividend and a $70 billion buyback program.

The tech giant reported revenue of $80.54 billion for the quarter, marking a 15% rise from the previous year and the quickest growth since early 2022, exceeding the $78.59 billion forecasted by analysts. Its earnings reached $1.89 per share, also above Wall Street's expectations of $1.51 per share.

Nvidia stock price target lifted at UBS

Earlier in the week, analysts at UBS hiked their target price for Nvidia stock (NASDAQ:NVDA) from $1,100 to $1,150 and maintained a Buy rating on the AI chipmaker.

The bank’s team of analysts believes that the expected shipment timing for Blackwell is still in December, which might cause a slowdown in growth during the October quarter.

Despite this, they pointed out that the demand for Nvidia’s GPU microarchitecture, Hopper, remains unexpectedly robust, serving as a strong buffer against the impacts of the upcoming major product transition.

“On top of this, we see such strong Blackwell demand - and systems mix in particular - that we are raising estimates and PT yet again,” analysts said.

“We are taking our CY25 revenue/EPS estimates ~20% higher to ~$175B/~$41 (Street ~$136B/~$30), driven almost entirely by changes to our mix assumptions for Blackwell (BW) as it has become evident to us based on numerous inputs from the supply chain that composition/mix for BW is shaping up to be much richer than Hopper,” UBS continued.

CFRA upgrades Qualcomm to Buy after earnings beat

During the week, chip manufacturer Qualcomm (NASDAQ:QCOM) posted fiscal Q2 earnings that topped analyst expectations, and offered strong guidance for the current quarter.

In the wake of the report’s release, CFRA Research analysts upgraded Qualcomm stock from Hold to Buy and hiked the target price from $155 to $200.

Despite worries about the growth of iPhone units, the overall trend for global handset units is on the upswing, likely to be stable or rise in CY 24, with a 10% growth anticipated for 5G phones, the analyst highlighted.

Moreover, they said that the chipmaker is benefiting from improved demand in China, where premium Android devices are selling well. Meanwhile, the introduction of Windows AI PCs presents a new growth opportunity for the company.

“Our upgrade reflects a growing TAM (AI PCs, smartphone content/share gains, autonomous cars, new IoT/industrial uses) that will offer sales diversification as we view QCOM as an on-device AI winner for the long haul,” noted the analyst.

Morgan Stanley (NYSE:MS) trims AMD price target due to longer-term concerns

In a note on Monday, Morgan Stanley slashed its price target for Advanced Micro Devices (NASDAQ:AMD) from $193 to $177 but maintained an Overweight rating.

The investment bank’s analysts expressed that despite some long-term concerns, their overall outlook on the company and its stock remains constructive for the long run. However, the prospects regarding the AI chipmaker’s earnings remain mixed, they added.

"AMD is one of the biggest 'battleground' stocks this earnings period, amid mixed conditions in the core business and longer-term questions in AI around NVIDIA's coming Blackwell chip," analysts said.

"Our view is constructive longer term, but we don't see this quarter as a catalyst given those factors,” they added.

Regarding its core business, the Wall Street giant expects that AMD's guidance for both the first and second quarters should be in line.

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