How are energy investors positioned?
Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
InvestingPro subscribers always get first dibs on market-moving AI analyst comments. Upgrade today!
KeyBanc upgrades Microsoft as strong Azure growth ‘solves all problems’
KeyBanc Capital Markets upgraded Microsoft (NASDAQ:MSFT) to Overweight on Thursday, reversing its April downgrade and citing stronger-than-expected Azure growth as the key driver that "solves all problems."
The broker reinstated its $630 price target, saying Microsoft has “bolstered the argument for positivity on almost every front.”
The move came after Microsoft reported earnings that topped expectations, with EPS of $3.65 versus the $3.37 consensus and revenue of $76.4 billion, ahead of the $73.79 billion estimate.
Cloud revenue reached $29.9 billion for the quarter.
KeyBanc highlighted Azure’s acceleration as the central reason for the upgrade. “Azure growth accelerated eight full percentage points in constant currency over the second half, from 31% in January to 35% in March to 39% exiting the year,” the analysts wrote.
“The last two quarters have rendered the debates all but irrelevant for the time being," they added.
Azure has delivered $500 million and $700 million of upside to guidance in the past two quarters. “The equivalent of finding a Monday.com in your couch cushions,” KeyBanc’s team said.
“Upside like this is why we do not expect the costs of supporting the Azure business to be debated much for the remainder of the year.”
The firm added that demand continues to exceed Azure’s current capacity, pointing to further upside. “Azure better in-quarter, better guide, and better potential upside,” they said.
In addition to cloud strength, KeyBanc praised Microsoft’s cost controls, noting that “over 10,000 employees” have been laid off since the prior downgrade. The firm also noted there was “no material mention of macro headwinds on the call.”
AI narrative for Tesla improving: Wolfe Research
Wolfe Research said Tesla’s (NASDAQ:TSLA) investment story is increasingly centered on its AI and autonomy efforts, even as the near-term outlook for its core auto business remains under pressure.
“This name trades more around the narrative than the numbers,” analysts wrote. “Confidence in Tesla’s AI opportunities remains the most important driver of the stock.”
The brokerage pointed to several upcoming catalysts, including potential approvals for Full Self-Driving in China and Europe, hands-free driving in parts of the U.S., and robotaxi developments.
Wolfe also noted that Tesla’s Optimus humanoid robot is slated for scaled production in 2026, with a long-term goal of 1 million units annually by 2030.
Despite those ambitions, the firm cut its 2025 and 2026 EPS estimates to $1.62 and $1.67, well below consensus expectations. It cited a “challenging” setup ahead, particularly if Model 3 and Model Y demand weakens following the expiration of U.S. EV tax credits in late 2025.
Tesla’s Energy division stood out as a relative strength. “We expect Energy revs to double in 2026 vs 2024 (to ~$18bn vs $9.2bn), with strong GMs,” Wolfe said, highlighting the company’s advantage in scale and integration as global battery storage demand outpaces supply.
“Success in Energy is critical in the medium term to avoid notable cash burn,” the analysts added, especially with regulatory credit sales declining and AI investments climbing.
M. Stanley lifts targets on chip stocks amid ‘exceptional’ AI chip demand
Morgan Stanley (NYSE:MS) raised its price targets on a group of semiconductor stocks, citing “exceptional” demand for AI chips from hyperscalers and consumer internet companies.
The bank said the surge in investor enthusiasm is “justified by long-term strength in the business,” and added that “our conviction on AI spend durability in 2026 continues to grow.”
Nvidia (NASDAQ:NVDA) remains the firm’s top pick, with its price target increased to $200 from $170. Analysts pointed to the Blackwell product cycle and robust demand exceeding shipments.
“Supply bottlenecks will continue to set the pace of growth, but supply is set to improve in the second half,” they noted.
The target on Broadcom (NASDAQ:AVGO) was raised to $338 from $270, with Morgan Stanley calling it “the most uncontroversial of the AI names,” citing its wide addressable market and long-term growth potential.
Astera Labs Inc (NASDAQ:ALAB) also saw its target lifted, to $125 from $99, with the firm expecting the name to trade at a premium “due [to its] unique AI exposure.”
Marvell Technology’s (NASDAQ:MRVL) target was moved to $80 from $73, while AMD’s was raised to $185 from $121.
While AMD (NASDAQ:AMD) plays a “somewhat secondary position in AI,” the firm pointed to momentum in its MI308 chip in China and better visibility in PCs to “support a higher multiple.”
Strategist explains how to navigate an AI bubble
Market commentary Sevens Report warned on Friday that a growing disconnect between AI chip stocks and the broader equity market could be an early sign of an “AI bubble.” The firm cautioned that investors should monitor the semiconductor sector closely for potential signals of a broader market peak.
“Every bubble in modern market history has been based on a narrative,” Sevens wrote. “That potentially bubble-inflating theme is unquestionably AI technology.”
While Nvidia is often viewed as a bellwether for AI enthusiasm, Sevens argued that focusing on a single name may be misleading.
“There are a lot of various factors that can impact a single stock, including a ‘cult following’… a dynamic that has appeared to have emerged with NVDA as well," Sevens said in the note.
Instead, the firm recommended tracking the Philadelphia Semiconductor Index (SOX), which includes a broader mix of AI-exposed chipmakers. “It would be much more prudent to keep tabs on the broader-based semiconductor index, SOX.”
Despite strong gains in the S&P 500 since July 2024, the SOX has failed to post a new high, raising concerns about the sustainability of the current rally.
“If AI remains the primary source of bullish optimism… this market is in trouble and at risk of rolling over sooner than later," it added.
Sevens likened the broader market to Wile E. Coyote running off a cliff, suggesting the S&P 500 “could very well be on the brink of facing [gravity] in the near-term.”
This stock is the best TSMC alternative, according to Bernstein
Samsung (KS:005930), not Intel (NASDAQ:INTC), is best positioned to become the leading alternative to Taiwan Semiconductor Manufacturing (NYSE:TSM), according to Bernstein.
The broker said Samsung’s reported $16.5 billion chip partnership with Tesla supports its long-held view that “the world needs a leading-logic semiconductor producer in addition to TSMC, and that Samsung…is better positioned than Intel to be the alternative.”
While the Tesla AI6 chip project may eventually expand beyond automotive applications, Bernstein estimates Samsung’s annual revenue from the deal will top out at $2–2.5 billion, with a total lifetime contribution of around $8 billion—well below the reported $16.5 billion figure.
Still, comments from Elon Musk hint at potential broader use cases, possibly in robotics or other devices.
For Samsung’s underutilized foundry unit, the partnership could mark a turning point. “$16.5B may lift Samsung Foundry revenue by 30-40% and the benefit to profitability should be much more,” Bernstein said, pointing to low current utilization, especially at the Taylor, Texas fab.
On the broader market, Bernstein expects only a limited industry impact. The Tesla chip deal would increase wafer fab equipment (WFE) demand “by LSD% at most,” the analysts said.
As for TSMC, the effect is seen as minimal, with Tesla’s contribution to the company’s revenue described as negligible.
“Samsung, with its comparable technologies, better cost structure and, more importantly, the support from a memory business and hence the ability to sustain investment, is better positioned than Intel,” Bernstein concluded.