5 Big Analyst AI Moves: Palantir Downgraded, Micron Price Target Hiked Ahead of Earnings
Here are the biggest analyst moves in artificial intelligence (AI) this week.
Microsoft is the ‘Best Way to Play AI,’ Says Truist
Truist Securities analysts believe Microsoft is the best company to invest in within their AI coverage.
Why Microsoft?
- Key Themes Driving Business: Microsoft is doing well in both infrastructure (the technical foundation for services) and security.
- Evolving AI Strategy: Microsoft’s AI efforts place it as a leader in the software industry.
- Durable Leadership: Companies like OpenAI (partnered with Microsoft) lead in AI models, which means Microsoft benefits more compared to other cloud providers.
Example
Microsoft’s cloud services help businesses use AI for tasks like customer service chatbots and data analysis.
Palantir Downgraded to ‘Sell’ by Monness, Crespi, and Hardt
Monness, Crespi, and Hardt analysts downgraded Palantir Technologies Inc from ‘Neutral’ to ‘Sell’. They recommend selling the stock because they think it is overvalued.
Reasons for Downgrade
- Stock Surge: Palantir’s stock rose 167% in 2023 and an additional 49% this year, making it too expensive.
- Disappointing Earnings: The hype around AI hasn't translated into revenue for many companies, and Palantir’s government contracts add uncertainty.
Example
Imagine you bought a product that everyone was talking about, but it turned out not to be as useful as promised. The price of that product would likely go down once people realize it’s not worth as much.
Bernstein Increases Apple’s Target Price: ‘Apple Can Lead in AI’
Bernstein raised its target price for Apple Inc from $195 to $240, indicating confidence that Apple will lead in AI.
Why Apple’s Stock is a Good Buy
- Huge Customer Base: Apple has over a billion customers, compared to ChatGPT's 100 million users.
- Upcoming iPhone Upgrades: AI features will be available on the higher-end iPhone models, boosting interest.
Example
Consider Apple introducing an AI assistant that makes your daily tasks easier, like scheduling or photo sorting. That would attract more consumers to buy the new iPhone models.
Wedbush Raises Micron Price Target to $170
Wedbush Securities raised its target price for Micron Technology Inc, a memory chip maker, to $170.
Why Wedbush is Positive on Micron
- Cyclical Industry: Although the memory chip industry has ups and downs, it's expected to be in short supply, hence higher prices.
- Investment Impact: Less investment in certain types of memory means more demand and better financial performance for Micron.
Example
If fewer people bake cakes and the demand for cakes remains high, those who do bake cakes can sell them at a higher price.
Rosenblatt Says Adeia is ‘Most Undervalued AI Play’
Rosenblatt Securities believes Adeia Inc is the most undervalued company in the AI sector.
Why Adeia Stands Out
- Leadership in Semiconductors: Adeia’s technology can solve problems faced by traditional semiconductor (electronic circuit) companies.
- Media Sector Influence: Adeia leads in digital entertainment technology, fitting well with the rise of online video.
- Strong Financials: With over 60% operating margin, the company is financially strong.
Example
Adeia’s technology could be like a new kitchen gadget that makes cooking easier. Even if not many people know about it yet, those who do find it makes their tasks much simpler and more efficient.
This clear, easy-to-understand format helps demystify complex AI investment moves for everyone, including those not familiar with the intricacies of the stock market.
Explanation of Terminology:
- Price Target: The predicted price level of a stock in the future, like setting a future price for an item based on its expected demand.
- AI (Artificial Intelligence): Technology that enables machines to mimic human intelligence, like virtual assistants (e.g., Amazon’s Alexa).
- Oversupply/Undersupply: When too much or too little of a product is available. For example, too many tomatoes might lower prices, while too few cause prices to rise.
- First-Mover Advantage: The benefits a company gains by being the first to introduce a new product or service. For example, being the first bakery to sell a new type of cake.
