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Investing.com — Here’s the biggest analyst in the artificial intelligence (AI) space this week.
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Nvidia stock remains a top pick for 2025: MS
Morgan Stanley (NYSE: ) reaffirmed Nvidia (NASDAQ: ) as a top stock pick for 2025, maintaining its overweight rating and $166 price target.
Although there have been temporary headwinds, including Hopper’s downsizing and Blackwell’s high product readiness, Morgan Stanley views these problems as temporary.
In the second half of 2025, Blackwell’s power will be “only the title,” the firm’s analysts stressed.
Dealing with competitive pressures from ASIC solutions, especially from Marvell (NASDAQ: ) and Broadcom (NASDAQ: ), Morgan Stanley believes that purchasing patterns will favor GPUs over time.
“While our AVGO/MRVL ASIC revenue estimates are very high, as is our forecast for GPU, we believe GPU will clearly outperform ASIC this year,” the analysts noted.
The report also highlights Nvidia’s $12 billion R&D investment as critical to maintaining its leadership in AI hardware and system-level applications.
Analysts also address concerns about industry challenges, including the rise of Artificial General Intelligence (AGI) teams.
While technologists are advocating for larger AGI systems, financial backers remain cautious about return on investment (ROI). Nvidia’s innovations, such as Mellanox (NASDAQ:) and NV-Link, are positioned to improve efficiency in this area.
Nvidia’s growth drivers — including analytics, automated AI training, and business applications — account for 70% of data center revenue. Analysts believe that these sectors will continue to drive growth even amid the forces of industry consolidation in 2026. “Even with some consolidation in the arms race, we should still see sustained growth potential, ” they commented.
The upcoming Consumer Electronics Show (CES) in January 2025 is expected to boost interest in Nvidia. Analysts expect the announcements to highlight strong demand for Blackwell, despite supply constraints.
“But at mid-year we remain comfortable that the focus on Blackwell will be the driving force behind earnings in 2h, which is an opportunity to open up a more significant opportunity,” the letter concluded.
Tesla stock remains the “king of repeats”, Barclays says
Tesla (NASDAQ: Barclays (LON:).
Shares of the electric vehicle (EV) maker are up nearly 90%, adding nearly $730 billion to its market capitalization – matched only by a handful of tech giants such as Nvidia and Apple (NASDAQ:).
Barclays notes that this performance is particularly noteworthy as the stock appears disconnected from fundamentals. Tesla’s price-to-earnings (P/E) has risen from 80x before the election to a high of 145x based on 2025 EPS consensus estimates.
“The separation of fundamentals in many ways reflects the consolidation we saw from Tesla in 2020-2021,” analysts led by Dan Levy said in a note.
They say the meeting is related to the “development of Tesla’s story mandate,” which focuses on topics such as autonomous vehicles (AV) and AI.
Another factor contributing to the process is the “Tesla-financial complex,” where options amplify stock movements. Additionally, retail interest remains strong, with 30% of Tesla’s outstanding shares held by individual investors, according to Barclays.
“Tesla is still the ‘OG meme stock,'” analysts stressed.
Barclays also indicated the growth of the “Elon premium” on Tesla’s valuation. The growing popularity of CEO Elon Musk has raised interest in the company, which translates into greater enthusiasm for Tesla stock.
Micron dropped BofA after disappointing guidance
Bank of America (BofA) downgraded Micron Technology (NASDAQ: ) to Neutral from Buy, citing weaker-than-expected gross margin (GM) for the second and third fiscal quarters .
Shares of the chipmaker fell sharply on Thursday after giving disappointing Q2 guidance. Micron projects second-quarter revenue of about $7.9 billion, missing both BofA’s estimate of $8.3 billion and the consensus net of $9 billion. The company also expects Q2 GM of 38.5%, below BofA’s 40% estimate and the consensus of 41%.
“Data center and HBM trends remain strong but weakness in the PC and phone markets is putting downward pressure on memory prices, particularly in NAND,” BofA analysts led by Vivek Arya noted. Persistent price challenges in NAND are expected to extend into the third quarter.
While BofA remains bullish on Micron’s position in the high-bandwidth memory (HBM) and AI markets, it lowered its 2025 and 2026 pro forma earnings per share estimates by 5% and 11%, respectively, to $6.80 and $8.78. The stock price has also been reduced to $110 from $125.
“Historically the stock has struggled to perform well as GM’s expansion has been muted, causing our stock to downgrade to Neutral from Buy, although we still feel positive about the situation of MU in the HBM/AI market where TAM was raised +20% for CY25 to $30bn.
While the data center and HBM systems are highlighted as strong, weakness in the PC and mobile markets continues to weigh on memory prices, particularly NAND. BofA, however, sees the possibility of recovery in these markets in the last half of 2025.
Oracle gets less revenue on value, capex worries
Monness, Crespi, and Hardt downgraded Oracle (NYSE: ) stock to Sell from Neutral, setting a 12-month price target of $130, which means more than 22% upside from current levels.
The firm raised concerns about Oracle’s valuation, rising competition, and aggressive capital expenditure (capex) plans.
Oracle shares are up 60% year-to-date, largely driven by enthusiasm for AI, marking their best performance since 1999. However, analysts at Monness warned that “the price has expanded, the competition is fierce, the software is changing, and the big environment is being destroyed.”
Oracle’s latest Q2 earnings highlighted growth issues, the firm noted. Its FY25 EPS estimate of $6.17 remains unchanged, while its FY25 Cloud Services revenue estimate has been revised up to $24.9 billion, down from last year’s forecast of $25.4 billion.
Monness expressed deep concern about Oracle’s “strong capex plans”, with spending expected to double in FY25.
“Our current FY:25 capex projection of $14.2 billion represents 24.6% of revenue, up from 13% in FY:24, and above the 27-year average of 4%,” the analysts wrote.
They argue that this level of spending is unsustainable, and drags Oracle’s free cash flow (FCF) ratio down to an estimated 8% for FY25, well below the figure its historical 28%.
The firm also pointed out that Oracle has a large balance sheet, with debt of $88.6 billion and a debt ratio of 86%. This restricts the company’s ability to increase shareholder returns through dividends or buybacks and reduces its ability to make acquisitions or capitalize on organic growth.
Although Oracle has seen the first success in the AI that it produces, Monness warned that “the inevitable movement in the LLM industry” and intensifying competition from the main providers of wealth can cause serious risks.
‘In AI we trust:’ BofA says, highlighting 6 chip stocks for 2025
Bank of America outlined its 2025 semiconductor outlook on Monday, highlighting six stocks it recommends for investors next year.
The bank predicts a 15% increase in sales of the semiconductor industry to $725 billion by 2025. This growth, although strong, is expected to be slower compared to the 20% growth seen in the year of the present.
BofA expects memory sales to rise 20% in 2025, after a 79% year-over-year increase in 2024, with core semiconductors, excluding memory, expected to grow 13%.
“We see 2025 as a year of two different trends. In the first part, AI investments and deployments of NVDA Blackwell managed by cloud customers in the US are keeping the momentum in the AI semis,” analysts led by Vivek Arya said in the letter.
“However, in 2H (second half), interest may shift to auto makers/industries that are not too crowded in terms of inventory replenishment and auto production pick-up depending on the economic recovery of the world.”
BofA’s top picks include AI leaders such as Nvidia, Broadcom, and Marvell Technology.
“On AI we continue to believe .. at least until 2H25,” analysts said.
In addition, the firm has selected Lam Research (NASDAQ:) as a flash-memory device leader ready to recover investment costs and solve problems in China.
Auto and EV Leader ON Semiconductor (NASDAQ:) is highlighted for its recovery in the second half of 2025, and Cadence Design (NASDAQ:) Systems is notable for its steady two-quarter growth, especially when AI hardware cycle decreases in the last half of the year.
