Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
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Barclays lifts Nvidia target to $240, says it’s ’most attractive name’ in its coverage
Barclays raised its price target on Nvidia (NASDAQ:NVDA) to $240 from $200, citing accelerating demand for AI infrastructure and the company’s central role in the buildout. The bank reiterated its Overweight rating, describing Nvidia as “the most attractive name in our space.”
Analyst Tom O’Malley pointed to a sharp expansion in AI investment. “With the wave of announcements that have come over the last 6-9mo, we now estimate over $2T of planned spend at ~40GW of power in total,” he said.
He added that “within that, we attribute ~65-70% to compute & networking with more deals likely in the pipeline, which starts to make the updated guidance of $3-4T look much more real.”
Barclays’ updated model projects Nvidia’s adjusted EPS to rise from $3 in fiscal 2025 to $6.93 in fiscal 2027 (FY27), implying a 53% annual increase.
The new target of $240 is based on 35 times its 2026 earnings estimate, while O’Malley said it would equate to about 30 times an implied EPS of $7.85 if revenue from Nvidia’s new OpenAI deal is included.
Nvidia on Monday agreed to commit up to $100 billion to OpenAI, supplying the ChatGPT maker with data center chips under a letter of intent covering at least 10 gigawatts of systems.
O’Malley emphasized that Nvidia remains at the heart of the AI ecosystem, with Barclays’ tracker pointing to 19 million GPUs tied to announced projects and hyperscalers driving demand.
He also highlighted rapid usage growth in AI applications, noting a 482% surge in ChatGPT message volumes in June.
“We see this largely flowing into the NVDA P&L (profit and loss) over the next 5+ years, moving numbers materially higher,” he said.
Barclays set an upside case of $300, assuming a larger AI market, stronger networking demand and higher margins. The downside case is $140, reflecting risks from weaker AI spending, a slower auto ramp and pricing pressure.
Microsoft named new Top Pick in large-cap software
This week, Morgan Stanley upgraded Microsoft (NASDAQ:MSFT) to its Top Pick in large-cap software, citing broadening growth drivers across AI and cloud. The bank lifted its price target to $625 from $582, calling Microsoft the “clearest and highest probability positive risk/reward” in the sector.
The target is based on 32 times projected 2027 GAAP earnings of $19.73 per share, with a Price/Earnings to Growth (PEG) ratio of 1.9, consistent with peers and historical averages.
The upgrade follows muted share performance despite strong results, including 39% constant-currency Azure growth, a 35% rise in commercial bookings, and margin expansion.
Analyst Keith Weiss noted that concerns over Microsoft’s ties to OpenAI, the pace of Azure’s growth, and competition from agentic computing have weighed on sentiment.
“Confidence in a path to shedding those weights and a broadening set of growth drivers elevates MSFT to Top Pick,” Weiss wrote.
He said Microsoft’s decision to forgo certain infrastructure contracts with OpenAI reflects a deliberate focus on enterprise clients, where margins and loyalty are higher. That approach is supported by rising bookings and significant capex.
Morgan Stanley’s model projects Azure AI revenue could reach $205.8 billion by 2029 under favorable margin assumptions.
Microsoft CFO Amy Hood said that the company’s "margins on the AI side of the business are better than they were at this point by far than when we went through the same transition and the server to cloud transition.”
Weiss also pointed to Microsoft’s strength in productivity software, with CIOs steadily upgrading to Office 365 E5 subscriptions and showing strong intentions to adopt Copilot tools.
In Morgan Stanley’s latest CIO survey, 53% of respondents expected Microsoft to capture the largest incremental share of AI spending, well ahead of competitors.
With disciplined expenses, dividends, and buybacks, Weiss sees Microsoft delivering a durable high-teens return profile that is “currently underpriced” at less than 26 times 2027 GAAP EPS.
Oracle gets a Sell rating on cloud overvaluation
Oracle (NYSE:ORCL) shares fell Thursday after Redburn initiated coverage with a Sell rating and a $175 target, arguing that investors “materially overestimate the value of Oracle’s contracted cloud revenues.”
The brokerage said Oracle’s position in single-tenant, large-scale deployments is “closer to that of a financier than a cloud provider, with economics far removed from the model investors prize.”
It estimated Oracle’s five-year Oracle Cloud Infrastructure revenue guide translates to around $60 billion in value, adding that “the market is already pricing in a risky blue-sky scenario that is unlikely to materialise.”
Redburn cautioned that investors wrongly assume supplying compute to OpenAI will mirror the “Cloud-1.0 playbook, where economics improved over time through higher asset utilisation and software layering.”
Instead, it said “Oracle’s economics are largely fixed and contracted, with the upside accruing to OpenAI."
"It is a spread business, and our analysis shows a thin one, further constrained by OpenAI’s operational involvement in Stargate, which limits Oracle’s ability to capture value," the firm added.
On potential upside from Generative AI applications, Redburn was skeptical, calling it “more narrative than reality,” given it hinges on broader adoption of Oracle’s cloud and “substantial R&D investment to provide the necessary tools.”
Redburn also flagged structural risks, stressing that “renting out servers is far more capital-intensive” than many investors appreciate. It added that Oracle’s “long-term lease commitments extend well beyond its OpenAI contract, creating a mismatch, while at scale OpenAI could pursue vertical integration.”
BofA raises Alibaba target to $195 on AI and cloud expansion
Earlier in the week, Bank of America Securities lifted its price target on Alibaba Group (NYSE:BABA) to $195 from $168, pointing to what it described as a transformative opportunity as the company steps up investment in artificial intelligence and cloud computing in the “Artificial Superintelligence (ASI) era.”
At its annual Apsara Conference, Alibaba said it will go beyond its previously announced RMB380 billion capital expenditure plan over the next three years.
“Management believes large models will be the next generation of operating systems while AI cloud will be the next generation of computers,” analyst Joyce Ju wrote. The company expects only five or six super cloud platforms worldwide, with Alibaba positioned as a leading full-stack AI services provider.
The event featured a series of product launches, including its largest language model, Qwen3-Max, which it said outperforms GPT-5-Chat in instruct mode. Alibaba also introduced the Qwen3-VL vision-language model, new multimodal models, and Bailian, a studio for AI agent development.
On infrastructure, it unveiled the Panjiu Supernode Server alongside new networking and storage systems designed for AI workloads. According to Omdia, Alibaba Cloud holds a 36% share of China’s AI cloud market, ranking first.
Ju said these initiatives strengthen prospects for cloud commercialization, supported by AI-native demand, overseas growth, and adoption in traditional industries.
“Eyeing the huge opportunity in the new ASI era, the company positions itself as a world’s leading full-stack AI services provider,” she added.
BofA now forecasts more than 30% compound annual growth in Alibaba’s cloud business over the next three years while maintaining a solid e-commerce outlook. Reflecting this, the bank raised its fiscal 2026–28 earnings per ADS estimates by up to 4%.
Morgan Stanley downgrades Adobe on uncertainty over GenAI growth impact
Morgan Stanley cut its rating on Adobe (NASDAQ:ADBE) to Equal-weight from Overweight and lowered its price target to $450 from $520, pointing to doubts over whether generative AI will serve as a clear growth catalyst.
The analysts said that “decelerating Digital Media ARR has driven outsized concern on ADBE’s ability to prove GenAI net expansive to its total opportunity.” While maintaining confidence in Adobe’s core business and the broader opportunity from GenAI, the bank warned of “potential pockets of risk” across its operations.
Its previous bullish view had assumed Adobe could innovate and monetize GenAI functionality to push Digital Media ARR growth into the “~mid-to-high teens.”
Instead, Morgan Stanley noted that “Digital Media ARR growth directionality diverge[d] from the pace and quality of innovation being embedded within the product portfolio.”
The Wall Street firm also observed that “direct ‘Gen AI’ monetization has lagged initial investor (and our) expectations, explained by Adobe’s propensity to foster ubiquity and broad adoption of the technology ahead of monetization.”
It flagged uncertainty across parts of Adobe’s ARR base, with limited confidence that GenAI will be a net positive.
Competitive pressures from diffusion engines and large platforms such as Meta and Google add to the challenge.
Although Adobe’s valuation at roughly “15x P/E” reflects “compelling value for a core Software franchise,” Morgan Stanley concluded it has “limited confidence in timing that catalyst path” and prefers “cleaner near-term narratives elsewhere in Software.”
