5 big analyst AI moves: AI demand to keep tech rally intact; C3 upgraded

Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.

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UBS says AI demand to fuel tech rally

Tech stocks are likely to continue rallying going forward, according to UBS investment strategists. More precisely, the Swiss investment bank sees chip stocks, as well as software and platform AI names well-positioned not just for 2024, but also for 2025.

“We see a positive outlook for the broad global semiconductor sector, which we think could record more than 50% profit growth in 2024 and strong momentum into 2025. On the back of recent earnings, we see upside risks to our AI infrastructure spending forecast, which currently stands at 38% compound annual growth rate (CAGR) during 2022–2027, on sustained AI training and inference demand.”

OpenAI drama attracts new investors

According to Venture Smarter, the search volume for “OpenAI stock” jumped by as much as 1,200% versus a 90-day high on November 18th, the day after Altman's firing was made public.

Elsewhere, Mizuho analysts reiterated a Buy rating on Microsoft Corporation (NASDAQ:MSFT) shares despite the recent OpenAI drama.

"For MSFT, we are not anticipating any significant changes regarding its governance or entitlements, although some change (to MSFT's benefit) is possible. And most importantly, we would very much expect MSFT's partnership with OpenAI to remain strong," the analysts commented.

"More broadly, notwithstanding a more difficult operating environment, we remain confident that MSFT's growth opportunities over the medium-term and beyond are greater than many realize, and this includes significant Generative AI monetization," the analysts added.

Microsoft and Google best positioned

TD Cowen analysts shared results of the latest survey about the U.S. productivity market. The key takeaways include Microsoft having a ~80% share of the $50b+ productivity market, while Alphabet (NASDAQ:GOOGL) is driving “modest share gains.”

“Bundling Suites with IaaS & Business Software is on the rise for both MSFT & GOOG, which is helping drive both revenue scale and competitive advantage,” analysts said.

More precisely, the analysts calculate Microsoft Copilot revenue opportunity at ~$16.5b by FY28.

C3.Ai upgraded

Oppenheimer analysts upgraded C3.ai Inc (NYSE:AI) stock to Outperform from Perform with a price target of $40 per share.

“AI stock has underperformed by 20% since mid-June, while revenue growth accelerates (0.1% in F4Q23 to 23%E in F2Q24, reporting 12/6). The "AI" theme is real and durable, with C3.ai well-positioned as one of the few pure plays helping customers drive new revenue sources/major productivity improvements; should accelerate growth into '25E,” analysts said in an upgrade note.

Analysts reflect on Palantir’s new contract

Palantir Technologies Inc (NYSE:PLTR) stock has surged about 200% this year with the bulk coming from expectations the software company will be one of the bigger AI beneficiaries.

However, not everyone is convinced.

William Blair analysts see “significant downside to shares of Palantir.”

“Its stock appreciation over the past year has been related to multiple expansion associated with AI hype that has not translated into revenue growth,” they said.

Deutsche Bank analysts also reiterated a Sell rating, despite {{||Palantir}} winning a new contract in the UK. On the other hand, Bank of America analysts weighed in more positively.