Senad Karaahmetovic | Investing.com
1) Apple is now seen as the major AI beneficiary
Morgan Stanley analysts released a note this week. They argue that 2024 will be a catalyst year for ‘Edge AI’ – a dominant market theme that will benefit certain companies, including Apple Inc (NASDAQ:AAPL).
“We see Edge AI as a multi-year tailwind that can improve Product and Services monetization and drive Apple's user base LTV higher, a key driver of long-term valuation, supporting our Overweight rating,” the analysts wrote in a note to clients.
The analysts argue that Apple will emerge as an Edge AI enabler because of 3 “distinct advantages” – Data, Privacy, and Vertical Integration.
Elsewhere, the other 5 stocks that are mentioned as AI ‘enablers’ are Dell (NASDAQ: NYSE:DELL), MediaTek Inc (OTC:MDTKF) Qualcomm (NASDAQ: NASDAQ:QCOM), Xiaomi (OTC:XIACF), and STMicroelectronics NV ADR (NYSE:STM).
2) Adobe is a new Top AI Pick at Piper Sandler
"October data reinforces our bullish view that new generative AI functions integrated directly into the application layer could better position ADBE to sustain growth despite a challenging macro," Piper Sandler analysts commented.
"Creative Cloud mobile downloads increased 19% y/y during the month of October (vs. 6% last year) while Acrobat mobile downloads increased 18% y/y (vs. 7% last year)."
Piper has an Overweight rating and a $650 per share price target on ADBE stock.
“We suggest growth investors revisit ADBE and see the potential for another run into year-end on further proof points that AI could help sustain a recovery. MSFT and now ADBE are our highest conviction ideas to own into year-end."
3) Microsoft’s ‘iPhone Moment’ Thesis Confirmed
Microsoft Corporation (NASDAQ:MSFT)-backed OpenAI’s first developer conference marked a significant stride toward becoming a platform company. Oppenheimer analysts attended the event and highlighted the announcement for a 75% price reduction, dropping the cost of GPT-4 LLM to $0.03 from $0.12 per 1K completion tokens.
This positions OpenAI's model as a foundational building block or "operating system" for AI development, akin to Windows, iOS, and Android in their respective domains.
“OpenAI further extended its "app store" beyond the popular plug-ins to userbuilt custom ChatGPTs, which can be resold in a "GPT Store," creating a hard-to catch virtuous network effect,” analysts wrote.
“For Microsoft, which has its own GAI platform strategy, OpenAI's success is mutually synergistic.”
4) Morgan Stanley increases its exposure to Dell
Morgan Stanley investment strategists increased the bank’s exposure to Dell Technologies Inc (NYSE:DELL)after adding a position in the stock. The bank’s 2 equity models now include Dell shares, which are up 80% this year.
"DELL appears well positioned to benefit from both the cyclical rebound in hardware markets and the long-term growth of artificial intelligence (“AI”)-related infrastructure," the investment bank wrote in a note.
DELL is also seen as an AI beneficiary through its AI-optimized PowerEdge XE server.
“The stock offers accelerating capital return with 10%+ potential annual dividend growth for the next five years," strategists concluded.
5) NVIDIA is still an undisputed AI chip leader - Bernstein
Bernstein analysts discussed reports emerging from South Korea where Naver, the local version of Google (NASDAQ:GOOGL), identified a solution to replace NVIDIA Corporation (NASDAQ:NVDA) H100 with Intel (NASDAQ:INTC) Sapphire Rapids (NASDAQ: INTC) and AI accelerators.
“We still believe Switching GPU to CPU is not an ideal option because it is super costly for AI tasks, especially LLM model training,” analysts wrote.
“We think the collaboration between Naver and Intel is doable for very narrow use cases, or inference function only, or low enough parameters; but definitely not the game changer yet.”