Key points
- Truist raises Microsoft price target to $675, citing cloud and AI strength.
- KeyBanc warns Nvidia’s guidance may fall short of expectations due to China uncertainties.
- BofA upgrades Snowflake to Buy, highlighting strong demand and AI opportunities. Palo Alto Networks upgraded to Buy by BofA.
- Barclays anticipates short-term gains for US software stocks despite AI uncertainties.
Microsoft’s robust cloud and AI performance has prompted Truist Securities to increase its price target to $675, reflecting confidence in sustained growth. The analysts emphasized Azure’s pivotal role, driven by cloud migration, expanding digital businesses, and the burgeoning AI market. They highlighted “revenue synergies” across Microsoft’s product portfolio, including its AI-focused offerings.
Truist believes Microsoft’s premium valuation is justified by its dominant position in the evolving AI landscape. Their updated forecasts project double-digit revenue, profit, and cash flow growth over an extended period.
Conversely, KeyBanc Capital Markets issued a more cautious outlook for Nvidia, predicting that its upcoming guidance might underperform Wall Street expectations. The primary concern revolves around uncertainty stemming from the Chinese market and pending license approvals.
While acknowledging strong underlying growth and impressive GPU supply increases, KeyBanc anticipates Nvidia will exclude direct China revenue from its forecast, citing potential export taxes and government pressure to use domestic chips. Despite these reservations, KeyBanc maintained an Overweight rating and raised its price target to $215.
Bank of America Securities upgraded Snowflake to a Buy rating, driven by positive momentum in its core data warehouse business and the expansion of its AI-focused platforms. Proprietary data sources and channel checks indicated strong demand and shorter sales cycles for AI-related projects.
Customers’ objection to increased spending on Snowflake for AI workloads reinforces its position as a central component of the AI stack. While acknowledging competitive pressures, BofA cited the substantial $155 billion AI software market as a significant long-term opportunity.
Palo Alto Networks’ strong fourth-quarter results, exceeding expectations in earnings and meeting revenue consensus, prompted Bank of America to upgrade its rating to Buy.
The company’s impressive growth across key metrics, including next-generation security and platform deals, further bolstered this positive assessment. While acknowledging valuation and margin risks, BofA highlighted the company’s successful strategy and strong performance across various segments.
Finally, Barclays anticipates a short-term positive bounce for US software stocks despite ongoing AI-related uncertainties. While generative AI concerns persist, positive end-demand and lower valuations could drive short-term gains.
The firm highlighted Salesforce and Elastic as attractive opportunities, citing sustained customer demand and conservative guidance, respectively. Despite this optimistic near-term outlook, Barclays acknowledges that these factors might not necessarily translate to long-term success.
