This week, several major analysts made significant moves and shared insights on artificial intelligence (AI) stocks, affecting companies like Microsoft, Google, AMD, and others. Below are the key updates:
Phillip Capital Downgrades Microsoft Over Valuation Concerns
Phillip Capital downgraded Microsoft from a “Buy” to an “Accumulate” rating, citing concerns over the stock’s valuation despite strong third-quarter results. The company’s Q3 2025 revenue and profit were in line with expectations, showing a 13% year-over-year increase. Microsoft’s Azure and cloud services drove the growth, and the company expects a 14% revenue increase in Q4, with Azure projected to rise by 34.5%. Phillip Capital maintained its target price of $480 for Microsoft, noting the company’s strong position in the AI market, especially with Azure and Copilot tools.
Jefferies Calls Google’s Stock Sell-Off an Overreaction
Shares of Google’s parent company, Alphabet, fell more than 7% after Apple’s Eddy Cue testified in an antitrust case, revealing a drop in Safari’s search volume. This caused Alphabet’s market cap to drop by $155 billion. However, Jefferies analysts called this sell-off an overreaction, citing Alphabet’s robust AI initiatives and diversified search ecosystem. The analysts pointed out that AI-driven features like Google’s AI Overviews are gaining traction, with over 1.5 billion monthly active users. They also noted that Google’s search dominance, particularly on mobile, remains strong.
Wells Fargo Encourages Revisiting AI Stocks
Wells Fargo’s Christopher Harvey suggested that after a significant pullback in AI stocks this year, now is a good time to reconsider investing in AI infrastructure and service providers. Harvey emphasized that AI-linked companies are better equipped to withstand macroeconomic pressures due to multi-year capital investment cycles. He also pointed to companies like Microsoft and Meta as examples of strong, profitable players in the ongoing AI supercycle. Wells Fargo introduced a portfolio of AI stocks, including Nvidia, Broadcom, and Dell Technologies.
Bank of America Upgrades AMD on Strong Growth Potential
Bank of America upgraded Advanced Micro Devices (AMD) to “Buy” from “Neutral,” citing a favorable risk-reward setup. Analysts raised the price target to $120 from $105, forecasting over 20% revenue growth over the next two years. The upgrade follows AMD’s strong Q1 results and an optimistic Q2 revenue outlook of $7.4 billion. BofA analysts also highlighted AMD’s share gains in PC and server CPUs, its expected AI GPU sales growth, and its improved earnings outlook.
Cantor Fitzgerald Downgrades Marvell Technology Due to Lack of Catalysts
Cantor Fitzgerald downgraded Marvell Technology from “Overweight” to “Neutral” due to concerns over its custom silicon business and the loss of key clients like Amazon and Microsoft. The firm reduced its price target from $125 to $60, citing potential revenue declines in 2027. While Marvell may see some growth in custom silicon revenue in the near term, analysts expressed concern over its long-term prospects, especially with the upcoming shift in chip supply to competitors like Alchip and Broadcom.
These analyst moves reflect the ongoing volatility in the AI sector, with some stocks facing downward pressure while others see potential for growth in the long term.
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