Microsoft, Meta See Analyst Upgrades on AI Catalysts; Chip Sector Outlook Improves

A series of analyst notes this week highlighted growing optimism around the artificial intelligence sector, with Stifel upgrading Microsoft on sustained growth prospects and Wall Street cheering Meta's new AI agent as a major catalyst.

Tech Giants Upgraded

Stifel upgraded Microsoft (MSFT) to Buy from Hold, raising its price target to $575 from $530. The firm expressed confidence that Microsoft can maintain mid-to-upper-teens revenue growth, citing several key factors:

• Sustained upside in its Azure cloud computing division.
• An accelerating contribution from its partnership with OpenAI.
• Strong growth in Copilot seats, which reached approximately 30 million in the fourth quarter.
• Improved efficiency and faster conversion of capacity to revenue.

Meanwhile, Meta Platforms (META) received broadly positive reviews following its Connect event, where its Muse AI agent took center stage. Evercore ISI, which rates the stock as Outperform with an $860 price target, called the focus on "Muse over Metaverse" a positive for investors, suggesting it could mark a transition for the company from a perceived "AI Loser" to an "AI Winner." Similarly, Raymond James raised its price target to $860, based on Muse's strong initial download numbers and significant revenue potential.

Chip Sector Sees AI Boost

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The positive sentiment extended to the semiconductor industry. Citi raised its price target on Micron (MU) to $1,300 from $1,150, anticipating a rally ahead of the SEMICON West conference. The bank lifted its sales and earnings estimates for Micron, citing better-than-expected DRAM pricing. Citi analysts expect strong AI-driven demand and potential supply constraints to keep memory prices elevated into 2027.

In a separate move, Rosenblatt initiated coverage of SanDisk (SNDK) with a Buy rating and a $2,400 price target. The firm's core thesis is that AI is transforming NAND flash memory from a commodity product into a critical component of computing infrastructure. Rosenblatt highlighted SanDisk's technology and new long-term agreements with major customers as key factors that should improve demand visibility and reduce historical volatility in the sector.

Broader Market View

Underscoring the theme, strategists at Citi reiterated their overweight position on equities, particularly in the U.S., stating, "we still believe that the AI trade will continue." The bank advised clients to add to their stock market exposure on any pullbacks, even amid headwinds from higher interest rates and oil prices. According to the note, the U.S. market is also seen as better insulated from rising energy costs.