Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
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Bernstein: AI trade concerns are ‘little premature’, buy Nvidia weakness
Bernstein analysts believe concerns that the AI trade is ending are “a little premature,” reiterating a bullish stance on Nvidia’s (NASDAQ:) stock.
After years of massive gains, Nvidia shares have lost momentum in 2025, declining about 16% year-to-date. The stock has underperformed both the broader semiconductor market, which saw a nearly 9% pullback, and the S&P 500, which is down 2.4%.
Nvidia dropped around 10% this week and is now trading at roughly 25 times next twelve months (NTM) earnings—its lowest valuation in a year.
“In fact, the stock now trades BELOW parity relative to the SOX (something we have seen only once or twice in the past decade) and at only a slight S&P premium, the lowest they have been since 2016,” analysts led by Stacy A. Rasgon wrote.
Bernstein called the stock’s de-rating "a little stunning," particularly as Nvidia enters a new product cycle. The firm highlighted that its Blackwell product shipments totaled $11 billion in January, a sign that supply constraints are easing while demand is expected to stay ahead of supply in the coming quarters.
Meanwhile, capital expenditures from Nvidia’s major customers continue to rise.
“It is becoming increasingly clear that DeepSeek is not doomsday for AI demand,” analysts added, pushing back against concerns over competition.
Regulatory risks remain a potential headwind, with AI diffusion rules set to take effect in May and possible further restrictions on sales to China. However, Bernstein pointed out that while Nvidia’s China revenues recently hit record highs, they now make up the smallest share of total sales in a decade.
The investment bank expects any disruptions from new licensing requirements to be short-lived. Even in the unlikely event of an H20 chip ban, Bernstein sees minimal impact on Nvidia’s earnings.
“For what it is worth, every ~$10B would account for ~25 cents in NVDA EPS; a full China datacenter ban would likely impact EPS ($5-6 baseline?) by mid to high single digits, with the stock already pulling back by much more than that,” analysts explained.
“Nevertheless, worries that the AI trade is ‘over’ feel a little premature to us, and valuation is getting increasingly attractive,” they added.
“We could soon be so back,” analysts concluded, reiterating an Outperform rating and a price target of $185.
Morgan Stanley reinstates Tesla as top pick, sees over 60% upside
Morgan Stanley has reinstated Tesla Inc (NASDAQ:) as its ’Top Pick’ in U.S. autos, setting a $430 price target that implies over 60% upside from current levels.
The Wall Street giant views the recent 35% year-to-date decline in Tesla shares as a compelling entry point, emphasizing the company’s transition from an EV maker to a broader AI and robotics player.
While Tesla’s auto deliveries have softened, Morgan Stanley believes its total addressable market is expanding as AI shifts from the digital realm to physical applications. A key driver of this upside is Tesla’s humanoid robotics potential.
"Every 1% of US labor force that can be captured by Tesla Optimus is worth approximately $100/TSLA share," analysts led by Adam Jonas noted. They see humanoid robots as an even larger opportunity than autonomous vehicles.
Tesla’s energy business is another area of growth. Analysts argue that rising global energy demand and AI-driven power consumption could make Tesla Energy more valuable than its auto segment, with energy storage margins potentially double those of its car business.
Morgan Stanley also cited Tesla’s declining reliance on China as a key factor behind its bullish stance. China-sourced revenues accounted for 21% of total sales in 2024, but that share is projected to shrink to 6-7% of total revenue by 2030.
Despite Tesla’s long-term AI and robotics potential, the firm acknowledges near-term risks. "EV ‘winter’ may be prolonged and could still require further steps to mitigate further potential losses near term," analysts warned.
They also flagged concerns over Elon Musk’s push for a 25% blocking minority stake and high expectations for Tesla’s Full Self-Driving and robotaxi initiatives.
Broadcom stock is a ‘must-own’, Mizuho analyst says
In a note released Friday, Mizuho analysts labeled Broadcom Inc (NASDAQ:) a "must-own" AI stock, pointing to the company’s strong earnings beat, rising AI revenue, and dominance in key semiconductor markets.
The analysts see Broadcom’s latest results and guidance as setting it apart from other AI semiconductor names, particularly when compared to competitors like Nvidia and Marvell (NASDAQ:) Technology.
"There is a lot to like from AVGO’s quarter and conference call," they wrote, stressing Broadcom’s ability to "beat, raise, and see stock go up" while other AI-related stocks have struggled.
The analysts noted that Broadcom did not experience the same gross margin pressure that weighed on Nvidia and has avoided the supply chain issues that have created hurdles for Marvell.
A major factor in Broadcom’s strength is its position in networking and custom silicon, two rapidly expanding areas within AI infrastructure.
"AVGO has both the R&D, reputation, and key customer relationships to sustain and grow their revenues and position in both key segments for many years to come. No one else can really touch them," analysts noted.
The company also disclosed two new ASIC design wins that could enter production in 2027, adding to its already substantial total addressable market target of $60-90 billion.
These wins, combined with increased investment from cloud hyperscalers in networking, reinforce Broadcom’s long-term growth prospects.
Despite recent volatility in the broader tech sector, Mizuho urged investors to focus on the bigger picture rather than short-term market swings.
"I would not overthink AVGO. It is a must own in my view if you can look past the near-term Tech correction and melt-down," the analysts said, suggesting that Broadcom’s earnings trajectory could support a move toward the $240-$250 range.
Bernstein hikes price targets on China internet stocks
This week, Bernstein has raised price targets on major Chinese internet stocks, citing AI-driven momentum as a key factor behind increasing valuations.
The firm lifted its price target for Tencent Holdings Ltd (HK:) to HK$640 and raised Alibaba’s target to $165, identifying both as leading beneficiaries of China’s expanding AI ecosystem.
Tencent remains Bernstein’s preferred AI play, with its integration of DeepSeek gaining traction across its platforms. It highlighted that Tencent’s AI assistant Yuanbao is now seeing downloads outpace those of Bytedance’s Doubao and the DeepSeek app.
"Yuanbao downloads inflected shortly after the DeepSeek integration announcement, overtaking Doubao… then more recently DeepSeek too," analysts led by Robin Zhu wrote.
Bernstein expects Tencent’s AI monetization strategy to bolster its advertising and gaming segments, with some upside for its cloud business. However, the firm noted that "selling GPU compute ranks lower on management’s list of priorities."
Alibaba (NYSE:) is also attracting renewed attention from global investors, particularly for its AI-driven cloud strategy. "The volume of inbounds from global investors ‘taking another look at China’ has been very notable," Bernstein observed.
It sees AI-related revenues supporting Alicloud’s growth but flagged potential risks tied to data center overcapacity. Bernstein also pointed to the ongoing debate around AI margins, noting that DeepSeek’s latest disclosure "pointed to high margins on selling API calls."
Beyond Tencent and Alibaba, the investment bank views AI as a broader catalyst for China’s internet sector. It suggested that the country’s rapid embrace of AI applications, driven by an engaged digital consumer base, could accelerate monetization opportunities.
Among other names, Bernstein raised its price target for NetEase (NASDAQ:) to $125, citing strong performance from Marvel Rivals and anticipation for the upcoming release of Ananta. However, the analysts cautioned that the company’s latest game launches, including Fragpunk and Destiny Rising, appear "somewhat experimental in nature."
AI trade will be back sooner rather than later: Goldman Sachs
Goldman Sachs expects the AI trade to regain strength despite recent market volatility that has pressured AI-exposed stocks.
Macroeconomic concerns and positioning unwinds have driven declines across AI-related equities, with Nvidia, a key Phase 1 stock in Goldman’s AI trade framework, falling 21% since the S&P 500’s February 19 peak.
AI infrastructure stocks (Phase 2) and AI-enabled revenue stocks (Phase 3) have also underperformed, down 14% and 12%, respectively.
Nonetheless, Goldman remains optimistic. "We expect continued technological progress and earnings growth will lead investors to eventually reengage with AI stocks," strategists led by Ryan Hammond wrote.
The firm sees better risk-reward in Phase 3 stocks—companies generating revenue from AI applications—compared to infrastructure names in Phase 2. "Even after the sell-off, the relative valuation of AI Phase 2 stocks is still slightly above its historical average, while AI Phase 3 stocks trade slightly inexpensive vs. history," strategists noted.
Among the 40 Phase 3 stocks Goldman covers, 27 are software firms. Goldman’s team expects the strongest sales growth over the next two years from Palantir (NASDAQ:), Cloudflare (NYSE:), SentinelOne (NYSE:), and Gitlab (NASDAQ:).
Goldman also highlighted early AI adopters already seeing efficiency gains. Companies like Amazon (NASDAQ:), Cognizant (NASDAQ:), and Walmart (NYSE:) are benefiting from AI-driven improvements in customer support, coding, and supply chain management.
Investor sentiment will be crucial in determining when AI stocks rebound. Goldman’s Sentiment Indicator, a contrarian gauge of positioning, remains above past market trough levels, suggesting further downside may be needed before a recovery takes hold.
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