5 big analyst AI moves: Nvidia seen as ’least expensive’ AI play, Apple downgraded

This week saw significant analyst re-ratings heavily influenced by AI momentum: Nvidia was upgraded to Buy by D.A. Davidson, citing sustained AI compute demand and positioning it as a cost-effective AI investment, while Broadcom and Oracle also received raised price targets and upgrades from Mizuho and BofA, respectively, due to accelerating AI business and infrastructure growth. In contrast, Apple was downgraded by Phillip Securities, citing stretched valuation and a lack of disruptive AI innovation. This strong AI-driven earnings outlook also prompted Barclays to raise its S&P 500 price targets for 2025 and 2026, upgrading the Technology sector to Positive.

Analysis

A significant divergence in analyst sentiment is evident, driven almost entirely by perceived positioning within the artificial intelligence secular growth trend. Barclays has raised its S&P 500 targets for 2025 and 2026 to 6,450 and 7,000 respectively, citing AI-centric growth and resilient corporate earnings as key drivers, while upgrading the Technology sector to Positive. This macro view is substantiated by bullish calls on specific AI infrastructure leaders. D.A. Davidson upgraded Nvidia (NVDA) to Buy, arguing that at 28 times projected FY26 earnings with ~40% profit growth, it is the 'least expensive direct investment' in AI, with overwhelming compute demand expected to supersede risks like custom silicon or China headwinds. Similarly, Oracle (ORCL) saw a 36% stock surge and a BofA upgrade to Buy, fueled by an 'exceptional' 230% quarter-on-quarter jump in remaining performance obligations, signaling massive demand for its OCI platform. Mizuho echoed this sentiment for Broadcom (AVGO), raising its price target on expectations of an accelerating AI growth trajectory, forecasting AI revenues to compound at 56% annually through 2028 and free cash flow to reach $40 billion by FY26. In stark contrast, Apple (AAPL) was downgraded to Reduce by Phillip Securities due to a stretched valuation, near-term headwinds from tariffs, and a notable lag in AI innovation, with its latest iPhone updates deemed 'incremental' and a key Siri revamp delayed until 2026. The firm noted that absorbing costs to maintain flat iPhone pricing is already pressuring profitability, with gross margins narrowing 140 basis points year-on-year in the prior quarter.

Key Decisions for Investors

• Investors should scrutinize technology portfolio allocations, potentially overweighting companies with demonstrated AI infrastructure momentum like NVDA, ORCL, and AVGO, which are showing quantifiable acceleration in revenue and bookings.
• Consider trimming or hedging positions in Apple (AAPL), as the stock faces headwinds from a stretched valuation, margin pressure from its new product cycle, and a perceived multi-year lag in generative AI capabilities relative to peers.
• Given the explicit analyst comparison, re-evaluate positions in NVDA versus AAPL; NVDA is presented as a high-growth 'offense' play at a similar multiple to AAPL, which is framed as a low-growth 'defense' play with increasing fundamental risks.
• Recognize that while Barclays' upgraded S&P 500 outlook is bullish, it is heavily dependent on AI-centric tech earnings, suggesting that stock selection within the tech sector is more critical than ever for capturing upside.