Investing.com — Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
This week, Microsoft stock (NASDAQ:MSFT) received a rare downgrade on Wall Street. Stifel analyst Brad Reback cut the rating on the stock to Hold from Buy, warning that market expectations for fiscal and calendar 2027 are “too optimistic” amid cloud supply constraints, rising investment, and intensifying AI competition.
Reback said it is “time for a break,” slashing the firm’s price target to $392 from $540.
He pointed to persistent Azure capacity limitations as a key drag. The analyst said that “given the well-documented Azure supply issues, coupled with Google’s strong GCP/Gemini results…and growing Anthropic momentum, we believe near-term Azure acceleration is unlikely.” The competitive pressure from rivals including Google (NASDAQ:GOOGL) and Anthropic is reshaping cloud growth dynamics.
Reback also expects revenue recognition to normalise after fiscal 2026 (FY26) benefited from several overlapping product cycles, reducing near-term upside.
Spending, meanwhile, is set to climb sharply. Stifel lifted its fiscal 2027 capital expenditure estimate to “~$200B (~40% growth),” well above the Street’s roughly $160 billion forecast. Reback said heavier investment will pressure profitability, cutting the firm’s fiscal 2027 gross margin view to “~63% vs ~67% consensus.”
Operationally, the analyst sees Microsoft entering “a new, albeit still efficient, spending phase” as it builds and commercialises its own AI platforms, which is “likely to be a headwind to operating margin (OM) leverage.”
While Stifel remains constructive on Microsoft’s long-term position, Reback warned that “the near-term prospects seem a bit more cloudy,” arguing the stock is unlikely to re-rate until capital spending slows relative to Azure growth or the cloud business delivers “a significant acceleration.”
DA Davidson downgraded Amazon (NASDAQ:AMZN) to Neutral from Buy on Friday, with analyst Gil Luria saying the company is “losing the lead” in cloud computing and showing early signs of a strategic disadvantage in an increasingly AI-driven retail environment.
The broker also lowered its price target to $175, arguing Amazon is “now scrambling to catch up through escalating investment.”
Luria said Amazon Web Services (AWS) continues to lag Microsoft Azure and Google Cloud. While AWS posted 24% year-over-year growth, the firm noted that “Google Cloud accelerated to 48% growth and Azure grew an allocation-constrained 39%.”
The analyst pointed to Amazon’s lack of an in-house frontier AI lab, unlike Google’s, and the absence of a primary partnership with OpenAI similar to Microsoft’s, as factors driving a shift in customer preference.
Luria warned that falling behind is forcing heavier spending. He flagged more than $200 billion in capital expenditures and said Amazon “may not have a choice but to follow through with a $50B investment in OpenAI” to stay competitive in frontier models.
He also raised concerns about Amazon Retail’s ability to adapt to a “new chat-driven Internet dominated by Gemini and ChatGPT.” Without direct integrations, Amazon risks a “structural disadvantage,” with merchants embedded in leading AI models potentially gaining a meaningful edge in traffic and advertising, Luria said.
Earlier this week, Wolfe Research said Tesla (NASDAQ:TSLA) could turn its robotaxi platform into a massive long-term revenue driver, projecting the business could scale to $250 billion in annual revenue by 2035 as autonomous adoption accelerates.
Analyst Emmanuel Rosner said 2026 is shaping up as a “catalyst-rich year” for the stock, with investors tracking progress across robotaxi expansion, Optimus production and the rollout of unsupervised full self-driving software.
“If successful, the long-term return on investment (ROI) could be very attractive,” Rosner wrote.
Wolfe’s top-down model assumes 30% autonomous vehicle penetration, a 50% market share for Tesla and pricing of $1 per mile, which the firm says could support around $2.75 trillion in equity value — or roughly $900 billion when discounted back, equivalent to more than $250 per share.
“Optimus and FSD licensing would support even additional upside,” Rosner added.
Near term, however, the analyst remains cautious on fundamentals and sits below consensus earnings forecasts for 2026 and 2027. Rosner pointed to margin pressure from higher input costs, pricing dynamics and shifts in Tesla’s FSD monetization model.
He also expects heavy investment in AI initiatives — including robotaxis and Optimus — to weigh on earnings next year as expansion costs build.
Beyond autonomy, Rosner pointed to strong momentum in Tesla’s energy storage segment, forecasting a sharp rise in deployments as new capacity comes online, even as competition and tariffs pressure margins in the short run.
Overall, “while we have concerns on near-term earnings, we remain tactically constructive, with a steady stream of catalysts ahead,” Rosner said.
Advanced Micro Devices (NASDAQ:AMD) remains a long-term winner despite a choppy fourth quarter, according to Truist Securities, which told clients to “buy the weakness” as earnings power continues to build.
The chipmaker shed more than 14% over the past five days, hitting the lowest level since October 2025.
Analyst William Stein said AMD is compounding profits at a “~45% CAGR through CY30 and trades at only ~11x CY30 EPS power,” adding that “it’s still a BUY.”
AMD’s fourth-quarter results topped expectations, and first-quarter guidance came in higher, though much of the upside stemmed from an unusual China-related dynamic. Stein noted that “65% of the revenues and all of the EPS beat were from selling a written-down China SKU.”
Even with that distortion, he said AMD reaffirmed a “60% DC CAGR, 35% total sales CAGR,” which it believes translates into “over $20 of EPS in 2030.”
Stein said the core of the bullish case remains “strong customer engagement,” with industry checks reinforcing momentum across AMD’s data-center and AI roadmap.
Revenue in the quarter reached roughly $10.3 billion, beating consensus by about 6%, driven by “~9% upside in both Datacenter and Client segments.” Stein pointed to accelerating deployments of Instinct MI350 GPUs, solid uptake of fifth-generation Epyc processors and management’s view that data-center revenue can grow “more than 60% annually over the next 3–5 years.”
Truist raised its 2027 earnings forecast to $10.11 and lifted its price target to $283.
“Buy the weakness as the long-term growth message overwhelms the imperfections in Q4,” Stein said.
Palantir Technologies (NASDAQ:PLTR) faces more downside risk despite a sharp pullback this year, Jefferies analyst Brent Thill said in a Friday note, adding that pressure on the stock’s valuation is likely to persist.
Shares are down about 27% year to date, but Thill argues the stock remains expensive versus the broader software sector even after a major compression in trading multiples. He noted Palantir had traded as high as 73 times forward revenue in November before sliding to roughly 31 times — still nearly double the next most expensive large-cap software peer.
“We’re making a call on valuation, not on fundamentals,” Thill wrote in a Friday note.
“We acknowledge PLTR’s fundamentals have been rapidly improving, and we believe its competitive differentiation has only strengthened while TAM has expanded. However, the downside risk to its trading valuation more than offsets the upside opportunity from improving fundamentals.”
That premium, he said, leaves the stock highly sensitive to shifts in investor sentiment, particularly around AI enthusiasm and broader software sector trends. Thill warned the current multiple “makes PLTR especially susceptible to changes in narrative,” including fears of slowing growth or cooling AI optimism.
“We believe that the declining sentiment in the software industry could expedite PLTR’s return to more sustainable valuation levels,” he added.
The caution comes despite a strong fourth-quarter performance, with Palantir reporting accelerating revenue growth, rising U.S. commercial demand and expanding operating margins, alongside initial 2026 guidance pointing to continued momentum.
Still, the results failed to justify the elevated valuation, with the stock falling about 21% after the earnings release. Jefferies reiterated its Underperform rating and maintained a $70 price target on the shares.
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