Investing.com — Here are analysts’ biggest moves in artificial intelligence (AI) this week.
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Apple’s focus on AI ‘clearly visible’ – BofA
Analysts at Bank of America Securities this week reiterated a buy rating and a $230 price target.
The move came after Apple (NASDAQ:) held its highly anticipated iPad event, which BofA said showed the tech giant’s focus on AI is “clearly visible.”
Analysts said Apple continues to impress with its hardware, especially its innovations in silicon technology, with the introduction of the new M4 chip in the iPad Pro.
The advanced Neural Engine in the M4 chip enables ‘AI-enabled functionality’ such as isolating subjects from backgrounds in 4K video with Apple’s Final Cut Pro.
It also enables document detection, uses AI to reorder frames and removes shadows in images. Additionally, new features in iPadOS offer improvements such as visual lookup, live text, and topic enhancement.
“No change to our estimates or price target. Maintain GenAI beneficiary purchase at the edge, with GM benefit and momentum in services,” BofA wrote.
Baird upgrades Micron stock to Buy
Baird analysts shared the latest insights from their research into the semiconductor industry earlier this week.
The most significant change is their rating upgrade on Micron (NASDAQ:), moving the stock from Neutral to Outperform.
The investment firm said it sees substantial upside potential for the US’s largest memory chipmaker, whose products are key to powering the immensely demanding AI models.
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“While we’re a bit late to the bandwagon, we see meaningful upside opportunities ahead for Micron, particularly given the stock’s recent pullback, at odds with incrementally positive trends unfolding in DRAM according to our recent channel checks, leading to somewhat unprecedented prospects for memory for years to come. 12-18 months,” Baird analysts said.
Baird highlighted that DRAM prices are exceeding channel expectations, with industry-wide supply growth expected to slow to low single digits quarter-on-quarter in the second half of 2024, partly due to capacity shifts to high-bandwidth memory (HBM). Analysts foresee a new supercycle for HBM, offering substantial gross margin potential for Micron, similar to the early NAND disaster.
“Micron has the potential to generate more than 60% gross margin on its HBM3E production, with the migration from 8H to 12H increasing revenues later this calendar year. Micron has the potential to capture high single-digit market share in HBM exiting C2024,” analysts said.
RBC optimistic about ServiceNow after analyst day
On Monday, cloud and AI software maker ServiceNow (NYSE:) hosted its financial analyst day in Las Vegas, drawing a largely positive response from analysts.
In a research note, RBC Capital expressed a more optimistic view of the company’s potential, emphasizing that generative AI functionality “should be incorporated into every workflow and product in every industry.”
“The company has done a good job of providing additional context early on on the opportunities around Pro Plus adoption, while platform innovation and expansion likely point to additional key opportunities, including around the front office,” RBC said.
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Looking ahead, ServiceNow is still “one of the best positioned to monetize GenAI and one of our best ideas,” the company’s analysts pointed out.
In a separate note, Morgan Stanley analysts noted that the Analyst Day effectively highlighted the core of the long-term investment thesis for NOW. In particular, the Wall Street giant highlighted the company’s growing capabilities, its effective execution in capitalizing on these opportunities and its best-in-class unit economics.
Citi raises Palantir’s stock price, but remains cautious
Palantir Technologies (NYSE:) raised its annual guidance Monday after reporting that quarterly revenue exceeded Wall Street expectations, buoyed by new contracts amid the continued rise in artificial intelligence.
Despite this, expectations fell short of Wall Street expectations, leading to a sharp decline in the company’s shares the next day.
Still, Citi Research analysts remained cautiously optimistic about the AI software company.
“In what is always a ton of unique numbers to unpack, PLTR’s first quarter results showed solid gains on both the top and bottom lines, with a slight upward revision to full-year targets” , they said.
“The company’s momentum in acquiring new customers continued with a record number of new additions, while commercial deal value growth was also quite healthy. The main issues in the quarter were weaker collections, with billings growth of just +2%, and weaker operating cash flow,” analysts said.
The investment bank raised its 12-month price target to $25 from $23, but maintained a neutral rating on the stock, noting that it “trades at one of the highest EV/Sales multiples in software and we await more conviction in the sustainability of growth + AIP revenue generation.”
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Benchmark: Roblox is ‘a standout in AI-driven environment’
Shares of video game developer Roblox (NYSE:) fell sharply Thursday after the company reported worse-than-expected first-quarter results and guidance.
The company’s revenue of $801.3 million fell just short of Visible Alpha’s estimate of $806.2 million.
However, revenue rose 22% year over year from the $655.3 million reported in the first quarter of 2023.
Ahead of the report’s release, Benchmark analysts in a research note forecast continued success in revenue growth, driven by tight cost control, which should lead to substantial operating leverage and increased cash flow.
“Roblox is embarking on a promising new growth opportunity by introducing ads to its platform this year, a move that is expected to be successful given the company’s innovative approach and large user base,” Benchmark analysts said.
In AI, Roblox leverages the fast-growing technology to improve platform security, reduce costs through efficient moderation tools, and support developers through content creation features like Avatar Auto Setup and Texture Generator, which improve game quality and quantity increase, Benchmark emphasizes.
Additionally, AI-powered real-time chat translations increase global access. The company considers Roblox a “standout” in the AI-driven space, stating that “substantial evidence shows that AI tools can accelerate net bookings, increase security and trust, and reduce costs.”
