Investing.com — These are the biggest artificial intelligence (AI) analyst moves for the week.
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BofA downgrades Tesla due to high execution risks
Earlier this week, Bank of America downgraded Tesla (NASDAQ: ) to Neutral from Buy, while raising its price target to $490 from $400.
Analysts cited high execution risks as a key reason for the downgrade, noting that the current valuation already reflects much of Tesla’s long-term potential in its core auto, robotaxis, Optimus and energy businesses.
BofA analysts, led by John Murphy, see Tesla’s robotaxi service as its biggest opportunity, accounting for roughly 50% of its value. The service, which is expected to launch in 2025, could be worth $420 billion in the US and over $800 billion globally.
Initially, Tesla is expected to own and operate the fleet, with third-party service providers joining later. While the rollout could start slowly with high costs per mile, Tesla’s lack of drivers offers a significant cost advantage over rivals like Uber (NYSE: ) and Lyft (NASDAQ:).
Tesla’s Full Self-Driving (FSD) technology also has a significant value, estimated at $480 billion.
BofA predicts that 23 million vehicles could have FSD by 2030, rising to 75 million by 2040, generating significant EBIT with higher margins than its core automotive segment. Analysts note that this estimate does not yet include potential licensing opportunities with other automakers.
Potential upcoming catalysts for Tesla include the launch of a low-cost model in early 2025, a new model later that year, the introduction of robotaxi in mid-2025, and an increase in Megapack production in Shanghai in the first quarter of 2025.
Additional drivers include updates on FSD subscriptions, progress on the Optimus humanoid robot targeting 1,000 units by the end of 2025, and potential risks from adverse policy changes.
AMD down at HSBC, price target cut
HSBC analysts downgraded shares of Advanced Micro Devices (NASDAQ: ) to Reduce from Buy on Wednesday and cut their price target to $110 from $200, citing concerns over AMD’s AI GPU plan, which analysts see as less competitive .
Analysts cited challenges in AMD’s ability to gain traction in the AI GPU market, pointing to tepid demand for the company’s MI325 GPU and possible delays in product shipments to rival Nvidia’s (NASDAQ: ) NVL rack platform.
For this reason, HSBC cut its projection for AMD’s AI GPU revenue in fiscal 2025 (FY25) to $8.1 billion, from $12.3 billion, well below the consensus estimate of 9, 5 billion dollars.
“AMD’s share price has corrected 24% over the past three months, but we believe there is further downside,” HSBC analyst Frank Lee wrote in a note. “We believe that AMD would not be able to penetrate the AI GPU market as much as we previously expected.”
HSBC expects AMD to launch its MI350 chip in the second half of 2025, according to its schedule. However, analysts do not foresee the introduction of an AI rack solution that could compete with Nvidia’s NVL rack platform until late 2025 or early 2026, aligning with the planned launch of AMD’s MI400 chip.
The downgrade also reflects concerns about AMD’s slowing customer momentum and limited growth potential for non-AI data center revenue in FY25.
2025 Salesforce Top Picks in Needham
Needham & Company named Salesforce Inc (NYSE: ) its 2025 Top Pick in Enterprise Software (ETR:) sector, adding the stock to its list of convictions.
In a note Wednesday, the firm raised its price target on Salesforce from $375 to $400, driven by optimism around the company’s Agentforce ( AF ) strategy.
“CRM is our top choice for 2025 in our business software universe,” Needham said, expressing confidence in Salesforce’s ability to execute and monetize its new initiative. The company noted that Agentforce is now a significant component of nearly half of business customer engagements, signaling its growing importance within the Salesforce ecosystem.
“AF is an active component in nearly half of business deals with clients,” the analysts said. Although the initial contract sizes are small, Needham expects a significant increase in the second half of the year if the pilot programs prove successful.
AI is playing a central role in Salesforce’s strategy, with the rapid hiring of AI-focused sales reps expected to drive stronger bookings in the second half. “Hiring of AI-focused sales reps is progressing rapidly, which should help 2H bookings,” Needham continued.
The company also pointed to the “halo effect” of Agentforce, which is becoming more apparent. Products like Mulesoft are expected to benefit significantly from the wider adoption of Agentforce.
“The halo effect becomes real, Mulesoft probably benefits more than other CRM products,” the note added.
From a valuation standpoint, Needham finds Salesforce attractive, trading at 24x FY26 free cash flow estimates. The company projects FCF growth of 20% in FY26, supporting its bullish outlook for the stock.
2025 is a key transition year for AI adoption: Evercore ISI
Evercore ISI sees 2025 as a key year for the widespread adoption of artificial intelligence, despite enthusiasm for the emerging technology already growing across industries.
While corporate earnings calls increasingly refer to AI, hyper-scaler capital spending remains high and interest in AI technologies, as measured by Google (NASDAQ: ) searches, has reached record levels, real-world implementation lags.
“With consumers enthusiastic about AI adoption and sentiment in corporate America relatively muted, 2025 is a critical transition year for AI adoption,” Evercore strategists led by Julian Emanuel wrote in a Sunday note.
AI capabilities have advanced significantly, moving beyond chatbots to automating complex physical and digital tasks. In 2024, generative artificial intelligence has fueled advances in robotics, autonomous digital agents, and manufacturing tools.
These improvements, rooted in improvements in temporal reasoning, communication and training data, enable AI systems to “think” before they act, marking a key shift in functionality.
While AI-driven innovation continues, investor sentiment turned cautious in mid-2024, leading to the first significant pullback in AI-exposed stocks since the launch of ChatGPT.
The company believes that AI will fundamentally reshape skilled work, solving the problem of labor shortages.
Evercore identifies key players in the AI ecosystem as “Enablers, Adopters and Adapters”, highlighting their importance in portfolio strategies to 2025. These companies are expected to play a central role in driving corporate adoption as companies increasingly view AI as critical to remaining competitive .
“We believe 2025 will attract more participants in the ‘AI revolution’ as advances in technology and its application make AI a ‘must have’ for companies’ ability to compete effectively in the years to come,” wrote Emanuel and his team.
Analysts continue to believe in the transformative effect of artificial intelligence, predicting that the S&P 500 will reach 6,800 by the end of the year.
Deutsche Bank cuts Adobe stock due to AI monetization issues
Also this week, Deutsche Bank cut Adobe (NASDAQ: ) to Hold with Buy, citing a lack of clear financial benefits from its generative AI text-to-image technology.
Analysts, led by Brad Zelnick, expect Adobe’s stock to remain “capped” until the company shows more tangible progress in monetizing its AI capabilities.
The downgrade followed a slowdown in Adobe’s annual net new annual recurring revenue, which slowed for the third year in a row. Wall Street projections indicate that this trend could continue in the current fiscal year.
While analysts believe Adobe will eventually be able to monetize generative AI, they note that “it will take some time for that to become apparent in the company’s announcement and/or financials.”
In December, Adobe posted an annual revenue forecast of $23.30 billion to $23.55 billion, below the average analyst estimate of $23.78 billion, according to LSEG data. The forecast prompted several brokerages to lower their price targets on the stock, despite Adobe’s management expressing confidence in stronger growth during the second half of the year.
Adobe is investing heavily in AI-powered tools, such as its Firefly offering, to compete with emerging rivals such as Stability AI, Midjourney and OpenAI’s Sora. However, analysts at Deutsche Bank (ETR: ) remain cautious, saying they are “moving on the sidelines” until Adobe’s AI efforts translate into clearer financial results.
