Investing.com — Here are the biggest analyst moves in the artificial intelligence (AI) space for the week.
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Loop Capital upgrades Apple, issues high Street price target
Shares of Apple Inc (NASDAQ: ) edged higher on Monday after analysts at Loop Capital upgraded the stock to Buy and set a new price target of $300, the highest on Wall Street.
Analysts expressed confidence in Apple’s potential to become the leading platform for next-generation AI, similar to its historical success with the iPhone and iPod.
“Our $300 PT is 33x EPS $9.00 CY2026 (what the stock is worth in 12 months). 33x P/E is a range of 20x – 35x post-Covid P/E of AAPL,” explained Loop Capital in a note to clients.
The latest update is based on the latest findings that show an increase in iPhone 16 production driven by excitement around AI.
“AAPL has an opportunity in the next few years to solidify itself as the ‘base camp’ choice of Gen AI consumers, just as it did for social media 15 years ago (with the iPhone) and digital content consumption 20 years ago (with the iPod),” the analyst wrote.
Wolfe Research initiated coverage of Google stock
Sell-side research firm Wolfe Research initiated coverage on shares of Alphabet (NASDAQ: ), giving it an Outperform rating and a $240.00 price target.
Analysts say that the bullish rating is based on a long-term perspective that Alphabet’s scale, investment in AI, leadership position in the market, and product innovation will allow the company to go beyond the digital advertising market, gain shares in Cloud computing, develop new. revenue streams, and maintain a strong position in the Gen AI race.
Additionally, the current valuation appears to be “reasonable on a growth-adjusted basis.” Wolfe said the $240 price target comes from a price-to-earnings (P/E) ratio of 25x FY25E.
“This multiple is above the median multiple of the same digital ad comp group but below the median multiple of the Mega cap comp group and is reasonable in our view, given GOOGL’s ability to expand the digital ad market and expand margins in the process,” the analyst noted.
HSBC cuts Qualcomm for retaining ‘less bullish PC AI narrative’
Later in the week, HSBC downgraded shares of Qualcomm (NASDAQ: ) to Hold on Wednesday, citing a lack of catalyst and a “less bullish PC AI narrative.” Despite raising their target price slightly to $200 from $190, analysts remain cautious about Qualcomm’s near-term performance.
On that note, HSBC forecast Qualcomm’s Q3 FY24 results to be in line with consensus, projecting revenue of $9.3 billion, close to the consensus estimate of $9.2 billion. Gross margin (GM) for Q3 FY24 is expected to be 55.9%, slightly below consensus of 56.1%.
However, concerns arose for Q4 FY24, as HSBC predicted quarterly average revenue at $9.3 billion, missing the consensus estimate of $9.8 billion due to lower handset revenue projections. Gross margin for Q4 is also expected to decline to 55.6% from the consensus of 55.9%.
HSBC points to uncertainty in the smartphone market, particularly with China’s Android handset market expected to decline by 15% quarter-on-quarter.
As for the PC AI narrative, HSBC has adjusted its expectations down after a mixed review post-Computex. Initially optimistic about QCOM’s early mover advantage with its Snapdragon X Elite/X Plus processors, HSBC now expects Qualcomm to ship just 600,000 AI CPUs in FY24, lower than previous market expectations of 1-1.5 million. This revision resulted in a substantial reduction in AI CPU revenue projections.
Accenture upgraded to Buy on UBS on GenAI-driven growth expectations
Meanwhile, UBS has raised its rating on Accenture (NYSE: ) shares to Buy from Neutral, citing potential for multiple expansion as the market expects rapid revenue growth amid AI picks.
“While we respect concerns about the pace of IT spending, we believe changes in the business mix (toward the cloud, digital transformation, cybersecurity, and now Gen AI should drive higher and more durable growth,” UBS analysts said.
Furthermore, UBS’s analysis of revenue from Accenture’s top 10 alliance partners relative to Accenture’s own revenue showed the highest acceleration over the next 12 months. As such, UBS believes the stock is currently undervalued in GenAI’s potential.
The bank’s analysts also expect Gen AI adoption to accelerate as clients begin to see value at scale from experimentation, perhaps faster than Accenture’s cloud business, which grew from $1 billion in FY12 to $32 billion in FY23, representing about 50% of its total . revenue.
TD Cowen is up Fortinet to Buy
During the week, cybersecurity firm Fortinet (NASDAQ: ) received an upgrade from TD Cowen analysts, who now have a Buy rating on the stock.
The investment bank noted a number of factors behind the move, including a solid channel check showing a basic cycle for security equipment, better prospects for the second half of 2024 due to easier year-on-year comparisons, operational technology (OT) upgrades. cycle, and increased SASE (Secure Access Service Edge) adoption.
In addition, analysts see Fortinet “as a beneficiary of the on-premise Gen-AI ramp-up.”
TD Cowen also said Fortinet’s valuation of 27x fiscal year 2025 free cash flow (FY25E FCF) is viewed as a potential bargain for its newly established $75 price target.