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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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Bank of America hikes Microsoft PT ahead of earnings
Bank of America (BofA) this week raised its price target on Microsoft Corporation (NASDAQ:MSFT) to $585 from $515 ahead of the company’s July 30 earnings release, flagging strong momentum in cloud infrastructure, encouraging partner feedback, and early signs of traction from its AI Copilot tools.
BofA said partner checks indicate deal activity in the fourth quarter was “largely in line” with Q3, supporting a “0-1% upside” to its $73.7 billion revenue estimate. Azure is expected to grow 35.5% year-over-year in constant currency, with “18.0% points from AI,” driven by cloud migrations and demand in security and data analytics.
The bank sees Microsoft’s Productivity and Business Processes segment growing 13% in constant currency, slightly above its base case. “Partner feedback suggests stable E3/E5 upgrade activity and ramping Copilot adoption,” it noted.
For the More Personal Computing segment, BofA models 3.4% growth, aided by stronger PC shipments.
Looking ahead, the firm expects 14% revenue growth in fiscal 2026, matching fiscal 2025. While its 45.5% margin forecast could face pressure from higher capital spending, BofA analysts said capex should remain “largely consistent as a % of revenue at 31%.”
Calling Microsoft its “top pick,” the analysts said the next catalyst could be “more evidence that Copilot is becoming more material to growth.” Despite a 30% rally since Q3, they see more upside as Azure and AI continue to gain ground.
Golden era of AI is just starting, analyst says
Artificial intelligence is reshaping the tech sector, and its impact is still in the early stages, according to Wedbush analysts led by Dan Ives.
In a note Friday, Ives predicted a strong second half of 2025 for tech stocks, supported by a “very strong 2Q tech earnings season” and growing AI tailwinds across chips, software, and enterprise applications.
“We have barely scratched the surface of this 4th Industrial Revolution,” he wrote, calling it a “golden age” for technology.
The analysts estimate $2 trillion in AI-related spending from enterprises and governments over the next three years. “The Street is underestimating the underlying AI-driven growth ahead,” they said, noting that “use cases are exploding” as companies scale up adoption.
Generative AI is moving into a consumption phase, which Wedbush sees as a major catalyst for software. NVIDIA (NASDAQ:NVDA), Microsoft, Meta Platforms (NASDAQ:META), Palantir (NASDAQ:PLTR), and Tesla Inc (NASDAQ:TSLA) were listed as the firm’s top tech picks for the remainder of the year.
Despite ongoing geopolitical risks and tariffs, the analysts expect a favorable policy environment. “The Trump Administration will continue to soften its stance around tariffs,” they wrote, pointing to Nvidia’s return to selling H20 chips in China as a “key strategic positive.”
Wedbush also highlighted AI’s broad ripple effect across the sector. “For every $1 spent with Nvidia, we estimate the multiplier is another $8 to $10 spent throughout the rest of the tech ecosystem,” the note said.
Apple (NASDAQ:AAPL) needs more AI to sell more hardware: HSBC
Apple’s push to boost iPhone upgrades through AI has yet to gain traction, according to HSBC analysts, who argue the company needs a more compelling AI offering to revive demand.
“The iPhone still represents about half of Apple’s sales,” the bank wrote, but “initial hopes that AI would accelerate the renewal cycle have been short-lived.”
HSBC said Apple Intelligence, announced in June 2024 and rolling out through April 2025, has “so far failed to trigger significant improvement in user experience.”
The delayed launch of AI-powered Siri may also cause users to hold off on upgrading, the analysts warned. In the meantime, Apple will have to rely on standard hardware improvements.
“Better specs with iPhone 17 in September should entertain the demand, in-line with what has been seen with the iPhone 16,” HSBC noted, assuming tariffs don’t push prices significantly higher.
Trade concerns remain a key overhang. The investment bank said Apple “cannot re-localise production fast enough to avoid U.S. tariff hikes,” and pointed out that market forecasts now assume a 20% increase in tariffs on Chinese goods.
Apple has already guided to a $900 million margin impact for the June quarter, though HSBC still expects the company to generate more than $100 billion in annual free cash flow.
Beyond trade, regulatory pressures are also building. The European Commission is probing Apple for potential Digital Markets Act violations, while a U.S. Department of Justice lawsuit introduces “long-term risk to the business model,” the bank said.
HSBC kept a Hold rating and a $220 price target, citing a “5% regulatory discount” and cautioning that legal and tariff risks may limit near-term upside.
Tesla shares may outperform after Q2 results, Barclays (LON:BARC) says
Tesla shares may outperform following second-quarter results despite deteriorating fundamentals, according to Barclays. In a recent note, the bank called the setup “confusing” but acknowledged upside potential, driven by investor focus on the company’s long-term autonomous vehicle strategy.
“We see potential for the stock to outperform,” analysts wrote, pointing to expectations that the earnings call could spotlight Tesla’s robotaxi ambitions. “The earnings call also presents an opportunity for Tesla’s robotaxi/AV narrative to shine,” they said, adding that Elon Musk may discuss fleet growth or expansion plans.
Barclays expects a modest sequential improvement in auto gross margin excluding regulatory credits, though it warned margins will “likely remain depressed vs prior years.”
The bank also anticipates a 10% decline in 2025 vehicle deliveries, noting that consensus earnings forecasts have been sharply cut. “Whereas ’25 consensus EPS was over $3.20 into the beginning of the year, it is now down to $1.84,” the note said.
The expected delay of Tesla’s low-cost model could further pressure sentiment. Barclays believes Tesla may prioritize a third-quarter pre-buy ahead of the September 30 expiration of the U.S. EV tax credit, potentially pushing the launch of the cheaper vehicle into the fourth quarter.
“Tesla likely to focus on a 3Q pre-buy...which could be perceived negatively,” the analysts wrote.
Still, Barclays argues that optimism around autonomous vehicles could outweigh weaker near-term fundamentals.
Intel stock could squeeze higher during earnings
Intel (NASDAQ:INTC) shares may be set for a short-term rally into earnings season, according to Citi, which sees potential for an upside surprise that could trigger a squeeze. Despite being one of the most shorted names in the sector, the bank believes improving fundamentals could shift sentiment.
“Intel remains the most popular short but we believe the stock could squeeze higher during earnings given potential upside to EPS,” analyst Christopher Danely wrote in a Friday note.
Citi pointed to lower capital expenditure and operating expenses, along with possible strength in the PC market—which accounts for 60% of Intel’s revenue—as key factors. The bank’s second-quarter estimates are above consensus.
More broadly, Citi held a mixed outlook on semiconductor stocks heading into Q2 results, suggesting a differentiated earnings season across the group.