Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
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Piper Sandler hikes Nvidia target price into earnings
Piper Sandler raised its price target on Nvidia (NASDAQ:NVDA) to $225 from $180 ahead of the tech giant’s upcoming earnings report, citing expectations for another strong quarter and resilient demand into the second half of the year.
The brokerage said it sees “upside to numbers for both the July and October quarters,” supported by robust U.S. hyperscaler spending and the return of China revenues.
Piper flagged that “guidance and commentary around China revenue for the October quarter” will be a key focus, with orders from Chinese customers potentially surging as they move quickly to secure supply.
For the July quarter, Piper is modeling revenue of $45.1 billion, roughly in line with Nvidia’s guidance and just below consensus at $45.7 billion. Analyst Harsh V. Kumar noted there is room for “slight upside” given the company’s record of modest beats and easing supply constraints in its data center segment.
China sales are expected to add significantly in the October quarter, with Piper estimating $5.5 billion to $6.5 billion from that market. Kumar pointed to the recent “15% cut of revenue” deal with the Trump administration that allows shipments of advanced AI chips to resume, calling it a key driver for the October and subsequent quarters.
He added that the agreement could trim gross margins on China business by about 15%, to around 60%, even though the H20 chip carries margins “at par or slightly higher” than Nvidia’s overall low-70% rate.
Apple may be ’turning the corner’, Morgan Stanley says
Apple (NASDAQ:AAPL) may be “turning the corner” after stronger-than-expected iPhone sales prompted an upward revision in September-quarter production plans, according to Morgan Stanley.
The bank’s Greater China Technology Hardware team raised its iPhone build forecast for the quarter by 8% to 54 million units, citing “better than expected iPhone sell-through in the June quarter” and “low channel inventory” that created a “larger channel fill opportunity.”
The revision was driven entirely by iPhone 16 and Pro Max models.
Morgan Stanley noted it had already anticipated this trend with a 55 million shipment forecast, but said the increase in builds boosts the chance of upside in the December quarter.
Based on seasonality, December builds could range from 73 million to 92 million units, though the bank sees 73 million to 81 million as more realistic, translating to 76 million to 84 million shipments.
iPhone 17 builds for the second half of 2025 remain unchanged at 80 million to 85 million, versus 84 million for the iPhone 16 in the second half of 2024.
On the stock, Morgan Stanley said it is “turning more bullish” after caution earlier this year. The bank reiterated its Overweight rating and $240 price target, citing “elongated replacement cycles,” “pent-up iPhone demand,” “structural gross margin tailwinds,” and easing tariff and regulatory pressures.
Pricing, it added, remains an “under-appreciated lever,” with no increase in services prices over the past two years.
“Estimates are biased upwards from here,” the analysts said, adding that Apple could benefit from “multiple expansion” if forecasts continue to improve.
With institutions “more underweight Apple than any other megacap tech stock” and hedge funds “biased neutral to short,” the bank said Apple is “one potential AI partnership away from breaking out.”
Melius cuts Adobe to Sell, says "AI is eating software"
Melius Research downgraded Adobe (NASDAQ:ADBE) to Sell on Monday, cautioning that the rise of artificial intelligence is driving “a multiple contraction phase in early innings” across major SaaS companies.
“The world is coming around to the reality that ‘AI is eating software,’” the firm said, pointing out that stocks such as Adobe, Atlassian, and Salesforce have each fallen more than 20% this year.
Melius drew comparisons to the early 2000s, when cloud adoption “decimated” valuations for traditional hardware giants, with earnings multiples sliding from the 20s to single digits.
The note warned that AI could erode the subscription model by enabling “almost anyone… [to] create an application so great that it can compete quickly and potently.” Seat growth in areas like marketing, sales, and creative work is “likely to” shrink as companies consolidate roles.
On Adobe specifically, Melius cited intensifying competition from AI-first challengers like Figma, Canva, and Runway, as well as from big cloud providers such as Google, which can “easily create image and video generation tools that literally blow you away.”
The broker questioned Adobe’s ability to monetize Firefly, noting customers may resist higher prices given free or cheaper alternatives.
Melius cut its 2026 and 2027 revenue forecasts to $25.1 billion and $26.0 billion, growth of 7% and 4% respectively, and set a $310 price target based on roughly 13 times fiscal 2027 (FY27) earnings.
"It can get worse for SaaS players like Adobe,” the firm said, with value continuing to move toward infrastructure providers such as Microsoft and Oracle.
HSBC downgrades Cisco on valuation, slowing momentum
HSBC downgraded Cisco Systems (NASDAQ:CSCO) to Hold from Buy on Friday, citing stretched valuation and slowing momentum, while trimming its price target to $69 from $73.
The bank also cut its EPS forecasts for fiscal years 2026 through 2028 by 7% to 14%, reflecting a weaker-than-expected outlook.
Cisco’s fiscal fourth-quarter results and 2026 guidance met consensus but fell short of HSBC’s projections. Revenue rose 7.6% to $14.67 billion, in line with estimates, while non-GAAP EPS climbed 13.8% to $0.99.
Operating margin improved to 34.3% from a year earlier but lagged HSBC’s forecast.
The networking unit showed signs of recovery, with growth rebounding from a 23.5% decline in the first quarter to a 12.2% gain in the fourth.
Still, HSBC flagged that the company’s 2026 revenue guidance of 5% growth, coupled with slowing performance obligations and backlog, indicates “the restocking effect may be coming to an end sooner we had expected.”
Cisco booked more than $2 billion in AI infrastructure orders in fiscal 2025, but HSBC said this strength “seems to be getting offset by weakness elsewhere.”
Security revenue rose 9.2% in the quarter, with mid-single digit order growth and stronger demand excluding the U.S. federal market.
However, the bank lowered its long-term revenue CAGR forecast for the segment to 8% from about 10%, calling overall growth “disappointing” despite cross-selling benefits from the Splunk acquisition.
Morgan Stanley lifts Foxconn price target on strong AI server outlook
Morgan Stanley raised its price target on Apple supplier Foxconn (TW:2354) to NT$250 from NT$220, citing stronger-than-expected momentum in its AI server business and better margin performance.
Foxconn posted second-quarter 2025 gross and operating margins of 6.3% and 3.2%, ahead of Morgan Stanley’s forecasts on scale benefits and cost controls. Net income came in at NT$44.4 billion, 38% above estimates, helped by non-operating income.
The company expects AI server rack shipments to rise 300% quarter-on-quarter in the third quarter, after second-quarter revenue in the segment grew 60% year-on-year. AI server revenue is forecast to climb more than 170% in the third quarter, with additional gains in the fourth.
“Management is confident in 300% QoQ AI server rack shipment growth in 3Q25 and ongoing supply share gain with major cloud service provider (CSP) customers and sovereign AI projects in 2026,” analyst Sharon Shih said.
Shih projects cloud and networking will become Foxconn’s largest revenue driver in 2026, accounting for over 50% of sales. To meet demand, the company has expanded capacity in the United States, investing more than $1.5 billion over the past year in AI server-related facilities in Texas, Wisconsin, and Ohio.
Following the strong quarter, Morgan Stanley raised its earnings estimates by 14% for 2025 and 2026, and by 9% for 2027. Shih said “enlarged scale will drive operating leverage, which appears to be boosting profitability earlier than we had expected.”
The new target is based on a residual income model that assumes an 8.5% cost of equity, 13% medium-term growth, and a 3% terminal growth rate.
The bank values the stock at 16 times expected 2026 earnings, with a bull-case scenario of NT$350.
