Wall Street analysts update ratings for AI and tech leaders

The AI Infrastructure Push

Wall Street is closely monitoring how companies are funding the massive buildout of artificial intelligence. StoneX highlighted a shift in how frontier AI deployments are being financed, noting that they are increasingly funded through assembled capital stacks. This means buyers are using a web of customer investments and backstops rather than relying solely on their own balance sheets.

Nvidia remains a central figure in this landscape as StoneX reiterated its buy rating for the chipmaker. The firm pointed to recent financing for Anthropic compute as a clear illustration of this trend. These types of deals show that the demand for high-end hardware is being supported by complex, multi-layered financial arrangements.

Meanwhile, Bank of America raised its price target for Microsoft to $630 per share. This move followed strong first-quarter results where Azure growth reached 48% year-over-year. The firm noted that this growth was about 300 basis points above what analysts expected, providing a clear signal of continued cloud demand.

Enterprise Software and Data

Analysts are also looking for evidence of how AI can turn into actual revenue for enterprise software companies. Goldman Sachs reiterated its buy rating on ServiceNow, stating that a durable rerating depends on the company converting its role in the AI stack into incremental growth. They are looking for stabilization in organic growth as a primary proof point for this transition.

Oracle also saw attention following its AI World Day, which put its silicon-agnostic strategy at the forefront. Wells Fargo reiterated an overweight rating, noting that the investor day provided much-needed visibility into the company's funding and capital expenditure plans. The firm specifically highlighted a $20B funding figure as a key detail for investors.

In the cybersecurity space, Morgan Stanley initiated coverage on Rubrik with an overweight rating. The firm argues that as the cost of cyberattacks moves toward zero, backup and data resiliency become more critical than ever. They see Rubrik as a company positioned to take a larger share of the IT and security wallet by expanding its data security platform.

Hardware and Consumer Tech

Apple continues to receive positive sentiment from analysts despite a broader softness in the PC and tablet markets. Goldman Sachs reiterated a buy rating, citing the release of new MacBook, iMac, and iPad models featuring next-generation M6 and A20 Pro processors. They believe these products, along with broad-based price increases, will support revenue growth and a favorable premium mix.

The automotive and transportation sectors also saw significant analyst activity. Bank of America maintained a buy rating on Tesla, suggesting that the robotaxi could become a meaningful earnings driver by the end of 2027. They also noted that a potential merger with SpaceX could provide additive optionality for the company's core business.

For retail and travel, Mizuho upgraded Hilton to outperform, calling it one of the highest-quality businesses in their coverage. They raised the price target to $421, reflecting a belief in the company's underlying business quality. These moves suggest a rotation toward high-quality, established brands alongside high-growth tech stocks.

Energy and Biotech Shifts

The energy sector saw several new initiations as analysts look for differentiated portfolios. William Blair initiated Chevron as outperform, noting that the oil and gas company has assembled a differentiated upstream and downstream portfolio. They highlighted notable cash margins as a driver for continued record earnings and free cash flow.

Geothermal energy also caught the attention of Morgan Stanley, which initiated both Fervo Energy and Ormat Technologies as overweight. They described Fervo as an EGS (Enhanced Geothermal System) pure play with a visible path to commercial roll-out. They viewed Ormat as an established leader with attractive growth in legacy businesses and emerging EGS upside.

In the biotech space, Jefferies initiated Absci as a buy, identifying it as a clinical-stage company using AI and deep learning for drug discovery. Similarly, Cantor Fitzgerald initiated coverage on Kardigan with an overweight rating, specifically highlighting the company's heart treatments. These moves show a growing interest in how deep learning and protein engineering are being applied to medicine.

Mixed Signals for Big Tech

Not all major tech companies received unanimous praise from Wall Street this week. Citizens downgraded Alphabet to market perform from outperform following its recent earnings report. The firm cited a slowdown in search growth of approximately 5 points from the second quarter to the third quarter as the primary reason for the downgrade.

However, JPMorgan disagreed with the bearish sentiment, reiterating an overweight rating for Alphabet. They argued that the stock's sharp move lower shows the margin for error for a hyperscaler spending hundreds of billions on AI infrastructure. JPMorgan noted that disappointing results in the core can lead to negative free cash flow posts, but they remain committed to the long-term buildout.

Finally, Seaport initiated coverage on Anthropic but chose to defer assigning a rating until the company's IPO. They described the company as unusual, noting that it benefits from leading AI model capabilities but faces risks from capital intensity. This cautious approach highlights the complexity of valuing private AI leaders before they hit the public markets.