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Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
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Buy Microsoft stock weakness, Piper Sandler says
Piper Sandler maintained a positive outlook on Microsoft Corporation (NASDAQ:MSFT) despite recent weakness in its shares, viewing the 12% decline over the past three months—underperforming the S&P 500—as a buying opportunity.
During recent investor meetings, Piper Sandler analysts discussed the ongoing growth of Azure, particularly in AI workloads.
While non-AI Azure growth has moderated, Microsoft has made strategic adjustments by consolidating two partner groups and introducing new incentives to drive AI and digital transformation projects.
Piper highlighted that AI workloads on Azure grew by 157% year-over-year, with the platform hosting significant AI applications, including ChatGPT.
“While ChatGPT remains the largest at-scale AI application hosted on Azure, several F500s are moving AI into production including Alaska Airlines, Toyota (NYSE:TM), and Walmart (NYSE:WMT),” writes Piper Sandler.
Microsoft’s $80 billion-plus in capex and lease spending this year is focused on building a “global, fungible, and flexible” data center fleet to meet future demand, particularly in AI inferencing.
Moreover, the Stargate project, a collaboration with OpenAI, is expected to strengthen Microsoft’s infrastructure for next-gen AI models. OpenAI’s growing reliance on Azure for training and inference workloads further reinforces Microsoft’s leadership in the AI space.
Piper Sandler’s analysts are confident that Microsoft’s broad product offering, strong cash flow, and its $13 billion-plus AI business position the company well to navigate macroeconomic challenges.
Despite recent volatility, the firm encourages investors to “buy the weakness.”
Buy Alibaba stock as analysis shows ‘clear AI product roadmap’: Mizuho (NYSE:MFG)
Mizuho analysts reiterated their Outperform rating on Alibaba (NYSE:BABA) shares and raised their price target to $170 from $140, citing a clear AI product roadmap and accelerating cloud revenue growth.
In a recent AI deep dive, Mizuho highlighted three key reasons for maintaining a bullish outlook.
The first is Alibaba’s strong AI foundation. “We believe the company has rock-solid building blocks for AI investments going from scaling model to AGI, building platform for model APIs to accelerate application deployment for customers, and ultimately providing end-user solutions directly across industries,” the analysts wrote.
The second factor is improved operational efficiency. Mizuho anticipates that Alibaba’s AI efforts will boost internal productivity, particularly in e-commerce.
“We anticipate AI to improve engagement, product recommendation and conversions, as BABA shifts from ML to Gen-AI to provide better context and relevancy for consumers,” Mizuho noted.
Lastly, the investment bank pointed to the acceleration in cloud revenue growth. Mizuho raised its fiscal year 2026 (FY26) cloud revenue growth forecast to 17% year-over-year, up from 13%, citing stronger AI adoption by enterprises and increased inference demand.
“AliCloud can upsell clients by providing a full stack, end-to-end AI solution that could lead to revenue growth acceleration and margin expansion,” the note states.
Mizuho views Alibaba’s AI strategy as built on three core pillars: intelligence (scaling its Qwen LLM to AGI), enterprise adoption (providing AI model APIs for application deployment), and direct end-user AI solutions (such as workflow automation agents).
These initiatives are expected to drive AI-driven efficiency gains, allowing non-TTG businesses to reach breakeven within two years, potentially eliminating 20 billion RMB in losses and boosting EBITA by 11%.
With 380 billion RMB in AI investments planned over three years, Mizuho considers Alibaba well-positioned for sustained AI growth and has added the company as a Top Pick in Asia Internet.
AMD cut to Hold at Jefferies
Meanwhile, Jefferies downgraded AMD (NASDAQ:AMD) shares to Hold on Thursday, citing a widening performance gap with Nvidia’s AI chips and limited traction in the AI market.
The investment bank also trimmed its price target on AMD shares to $120 from $135.
Despite AMD’s MI300x offering higher advertised TeraFLOPs (TFLOPs) and memory bandwidth than Nvidia’s H200, Jefferies’ proprietary benchmarking suggests that the H200 “retains a significant performance advantage over the MI300x,” with expectations that “the gap expands even further with Blackwell and Rubin.”
The benchmarking, conducted over the past two months with Trelis Research, compared real-world throughput of Nvidia’s H200 and AMD’s MI300x across open-source models such as Llama 405B, Llama 70B, and DeepSeek R1.
Results showed that Nvidia’s H200 consistently outperformed AMD’s MI300x by “a wide margin (80-300%+),” highlighting the advantage of Nvidia’s mature software stack.
Even though the MI300x reports higher compute power—2615 TFLOPs FP8 Dense versus H200’s 1979 TFLOPs FP8 Dense—and greater memory bandwidth, AMD’s hardware struggled with real-world inference workloads.
“A valid pushback would be that the AMD solution is not as well optimized for the models we tested, but we view this as exactly the point,” analysts led by Blayne Curtis noted.
“These results underscore the importance of NVDA’s mature software stack for managing GPU efficiencies and this gap will widen as system performance,” they added.
Jefferies also warned that AMD faces growing competition from Intel (NASDAQ:INTC), which is expected to introduce more competitive chips starting in 2026.
Furthermore, AMD is not likely to have a viable rack-level solution until the MI450, expected in 2027, by which time Nvidia (NASDAQ:NVDA) could transition to next-generation rack designs that could fit four times more GPUs.
While AMD shares have already fallen over 32% in the past six months, Jefferies believes Street estimates remain too high and cautioned that “we see more downside risk than upside potential near-term.”
Wedbush adds IBM to its Best Ideas List
Wedbush Research added IBM (NYSE:IBM) to its Best Ideas List this week, a move driven by the company’s stronger focus on balancing growth investments with improved operating efficiency.
The investment bank expects this strategy to support a strong free cash flow trajectory, projecting it to outpace revenue growth by approximately 2 to 3 percentage points.
“With AI expected to drive $4.4 trillion in annual productivity gains by 2030, we believe that IBM is well-positioned to capitalize on the current demand shift for hybrid and AI applications as more enterprises look to implement AI to drive efficiencies across operations,” Wedbush said.
IBM now joins over a dozen other stocks on Wedbush’s Best Ideas List, including Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), and Microsoft.
The addition follows IBM’s strong fourth-quarter earnings, which exceeded Wall Street expectations, driven by robust performance in its software division as enterprise IT spending gained momentum.
BofA double upgrades Cloudflare to Buy
Earlier in the week, Bank of America (BofA) analysts double-upgraded Cloudflare (NYSE:NET) to Buy from Underperform amid improving fundamentals and significant growth potential in AI and network security.
The bank highlighted two main catalysts driving its positive outlook: Cloudflare’s differentiated approach to AI and its growing momentum in network security, particularly in Secure Access Service Edge (SASE).
BofA sees Cloudflare’s AI-as-a-Service (AIaaS) offering as a future leader in enterprise AI consumption.
“AIaaS is already resonating with customers; our surveys show AI is the leading product Cloudflare customers are looking to adopt in the next twelve months (NTM), with average AI spending forecast to increase +8% to $100k per customer, or 15% of total customer spending,” analysts led by Madeline Brooks said in a note.
In network security, Cloudflare is gaining market share, especially in the SASE segment, and continues to challenge incumbents.
The company’s security products have achieved 33% market penetration, and over half of new spending in the next twelve months is expected to focus on security solutions.
This trend positions Cloudflare as a growing threat to established players such as Check Point Software (NASDAQ:CHKP) and Cisco (NASDAQ:CSCO) as enterprises increasingly adopt software-based security models.
“Given recent momentum, we are increasingly confident in NET’s ability to meet or exceed full-year (FY) revenue guidance,” analysts continued.
Alongside the upgrade, BofA also hiked its price target for Cloudflare to $160 from $60.