Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
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D.A. Davidson upgraded Microsoft Corporation (NASDAQ: MSFT ) to Buy and lifted its price target to $450 from $425, citing a more disciplined capital expenditure strategy and strong positioning among mega-cap tech firms.
“We believe Microsoft has moved to a more rational capex strategy and is the best positioned Mag6 for a slowing consumer,” D.A. Davidson’s team said. The firm noted that Microsoft has streamlined its capex approach, improving margins and return on invested capital.
“Our September downgrade was partially predicated on the poor ROI of Microsoft escalating the AI infrastructure buildout wars,” DA Davidson explained. However, the company has since guided for flat sequential capex over the next few quarters and slower growth heading into FY26.
“Furthermore, Mr. Nadella has signaled the end of the escalation, which we believe Amazon (NASDAQ: AMZN ) has already responded to by guiding for flat sequential capex over the next four quarters.”
Microsoft is also offloading certain AI infrastructure costs to partners like CoreWeave, Oracle (NYSE: ORCL ), and SoftBank (TYO: 9984 ).
“The recent disclosure by Coreweave that Microsoft was a 62% customer indicates Microsoft is using Coreweave as overflow for workloads it is either not ready for or is not interested in," the analysts continued. Oracle’s rising capex spending further suggests “OpenAI’s need to find new training capacity as Microsoft is no longer interested.”
DA Davidson sees Microsoft as a defensive play with limited consumer exposure relative to other Mag6 stocks.
“Apart from NVDA, Microsoft has the least consumer exposure out of the Mag6.”
Wells Fargo reiterated its Underweight rating on Tesla Inc (NASDAQ: TSLA ) and lowered its price target to $130 from $135, citing weak fundamentals, slowing sales, and margin pressures.
Despite Tesla’s 40% year-to-date decline, the firm believes the stock still has "more than 40% downside" as earnings estimates continue to fall.
"We’ve repeatedly flagged the weak core biz fundamental since our March ’24 downgrade," analysts said, adding that "shocking YTD EU sales have finally shifted focus to fundamentals."
Tesla’s sales are down 16% year-to-date, with European sales plunging 45% in January and 41% in February across the region’s top nine markets.
In China, sales have dropped 14% for the year, while U.S. sales fell 11% in January, according to S&P estimates.
Wells Fargo also pointed to risks from recent protests and vandalism, which could weigh on future demand.
The investment bank cut its Q1 2025 delivery estimate to 360,000 units, a 27% drop quarter-over-quarter and 7% year-over-year. While a Model Y refresh and the new Model “2.5” launch in Q2 could provide some support, analysts warn that price cuts are losing their impact, competition in China remains intense, and the new model may cannibalize Model 3/Y sales.
Wells Fargo also remains skeptical of Tesla’s planned CyberCab launch in Austin, stating it has "limited testing & concerns around the vision-only approach."
Given these challenges, analysts see further downside risk, emphasizing that "if fundamentals matter, the momentum likely turns negative as consensus estimates fall."
Also this week, Bank of America (BofA) raised its rating on Intel Corporation (NASDAQ: INTC ) shares to Neutral from Underperform, after the chipmaker tapped Lip-Bu Tan as CEO, citing his “solid track record” and potential to lead a turnaround.
“We really like the new CEO appointment,” BofA analysts wrote, raising their price target to $25 from $19.
Tan, the former Cadence Design (NASDAQ: CDNS ) chief, oversaw a “32x stock appreciation versus SOX 16x,” and his industry connections, including as Chairman of Walden International, were seen as strategic advantages.
BofA analysts see “a greater opportunity to restructure/turn things around under his leadership” but remains cautious about Intel’s AI roadmap and competition from ARM-based CPU makers. They also noted that improving market conditions could support Intel’s divestiture of its Altera and automotive units, helping to “delever the balance sheet.”
Tan’s experience in electronic design automation could also benefit Intel’s relationships with Cadence and Synopsys (NASDAQ: SNPS ), which have “been under pressure due to uncertainty at this large customer.”
Additionally, BofA highlighted reports of a potential foundry joint venture with TSMC involving “fabless companies such as Nvidia (NASDAQ: NVDA ), AMD (NASDAQ: AMD ), Broadcom (NASDAQ: AVGO ), and Qualcomm (NASDAQ: QCOM ).”
While unconfirmed, analysts suggested such a deal “could aid INTC’s potential turnaround efforts under the incoming new CEO.”
Meanwhile, Rosenblatt reinitiated coverage of Super Micro Computer (NASDAQ: SMCI ) with a Buy rating and a 12-month price target of $60, citing accelerating AI revenues and improved visibility.
"AI revenues are now nearly 70% of sales and are accelerating and increasing visibility to 1-2 years," analysts stated.
The investment bank highlighted Supermicro’s strong position in AI, noting that "investors have started to appreciate the company’s inherent innovation, design, deployment, and manufacturing scale capabilities."
Supermicro’s expertise in "Green" computing and its specialized architecture, including "building block architecture (BBA)," "plug-and-play," and "Twin architecture," were cited as key advantages in optimizing AI-driven performance.
"We view the company’s ability to deliver liquid cooling at scale as a competitive advantage," analysts added, noting that its liquid cooling technology can more than double rack compute power—critical in power-constrained data centers.
Rosenblatt sees Supermicro’s long-standing presence in AI as a “formidable business model” in the evolving market landscape.
Citi upgraded Xpeng (NYSE: XPEV ) to Buy from Neutral, citing stronger projected volumes for 2025 and 2026. The Wall Street bank also raised its price target from $13.70 to $29.00 (HK$53.30 to HK$113.00).
Analysts now forecast Xpeng will sell 480,000 vehicles in 2025 and 580,000 in 2026, up from previous estimates of 260,000 and 330,000. The revision follows strong February orders, plans to launch 2-3 battery electric vehicles and 1 extended-range EV this year, and rising demand for EVs in China.
Revenue projections for 2025 and 2026 were raised from Rmb49.1 billion and Rmb59.0 billion to Rmb79.2 billion and Rmb93.3 billion, with vehicle margin forecasts increasing to 11.9% and 13.5%, respectively.
Citi also adjusted its bottom-line expectations, narrowing the 2025 loss estimate from Rmb4.9 billion to Rmb0.4 billion and projecting a Rmb2.7 billion profit in 2026.
Citi highlighted Xpeng’s focus on AI and robotics as a potential growth driver.
“Xpeng has expressed its commitment to the AI/Robotics field, and we see some upside risk to Xpeng if it achieves decent progress,” the bank’s analysts wrote.