Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
Wolfe Research names Nvidia top AI pick for 2026
Nvidia (NASDAQ:NVDA) has been named the top artificial intelligence pick for 2026 at Wolfe Research, as the broker believes that the stock's relative underperformance versus other AI-linked names leaves scope for further upside.
Analyst Chris Caso added Nvidia to the Wolfe Alpha List, replacing Micron. He noted that "NVDA is up 'only' 36% over the past year," lagging the performance of several other companies tied to AI spending.
Caso attributed the stock's lag to three main factors: "the late launch of Blackwell, concerns about the sustainability of AI spending in general, as well as concerns about share losses to custom AI solutions." He said those issues have weighed on sentiment despite continued strength in underlying demand.
The analyst now sees those concerns easing as Nvidia's product cycle progresses. "Blackwell is now ramping fully, and Rubin is on time for 2H26 ramp," Caso wrote, adding that Rubin delivers "5x inference improvement vs. Blackwell."
He noted that Nvidia's latest outlook implies "at least $40bn upside" to consensus revenue estimates for calendar year 2026 (CY26). Resumed shipments of H200 products to China would represent an additional source of upside, Caso added.
Wolfe also pointed to improving pricing dynamics. Caso said he was "positively surprised by what we heard on pricing for Blackwell Ultra and Rubin," viewing this as further confirmation of Nvidia's "competitive moat."
On competition, he argued that pressure remains limited, saying "Google's TPU represents NVDA's main competition," while other custom AI platforms have yet to scale at a comparable pace.
Despite Nvidia's gains, the analyst believes the AI chip giant's valuation remains compelling, with the stock trading "at just 23x our CY26 EPS," well below its five-year average.
Microsoft 'in pole position to garner increasing IT Wallet share'
Microsoft (NASDAQ:MSFT) is positioned to capture a larger share of generative AI spending and expanding software budgets in 2026, Morgan Stanley's latest fourth-quarter 2025 CIO survey showed earlier this week.
Analyst Keith Weiss said the tech behemoth "remains in pole position to garner increasing IT Wallet share as GenAI adoption ramps and cloud migrations pick up."
Morgan Stanley reiterated its Overweight rating and kept the stock as a Top Pick.
CIOs surveyed by the bank expect software budgets to grow 3.8% in 2026, a modest acceleration from 3.7% in 2025. Against that backdrop, Weiss highlighted that Microsoft is the "#1 share gainer of IT wallet as a result of shift to the cloud on both a 1-year and 3-year view."
Adoption of Microsoft's generative AI tools remains broad. The survey showed 92% of CIOs expect to use Microsoft's GenAI products over the next year, little changed from 95% a year earlier, pointing to sustained, already high penetration.
In cloud infrastructure, Azure continues to lead peers. CIOs reported that 53% of application workloads currently sit on Azure, and Weiss said this advantage is expected to persist over the next three years.
The analyst pointed out Azure AI as a "key priority" for customers, noting that 37% of CIOs plan to use Azure OpenAI Services and 42% expect to adopt GitHub Copilot within the next 12 months.
Use of Microsoft 365 Copilot is also rising. Morgan Stanley said 80% of CIOs plan to deploy it over the next year, calling this "the fifth consecutive sequential increase." Over a three-year horizon, CIOs expect Copilot penetration to reach 61% of employees.
Weiss said Microsoft's generative AI leadership, improving demand signals and margin expansion potential are "well underpriced," reinforcing his Top Pick view in large-cap software.
Morgan Stanley lifts ASML target to €1,400
In a separate note, Morgan Stanley raised its price target on ASML (AS:ASML) (NASDAQ:ASML) by 40%, pointing to expectations for much stronger earnings in 2027 as semiconductor capital spending accelerates and demand from China proves more resilient than previously feared.
Analyst Lee Simpson hiked the target to €1,400 from €1,000 and reiterated an Overweight rating, keeping the stock as a "Top Pick." He said the firm's confidence is based on "higher 2027 foundry and memory capex as well as better than feared China demand."
Morgan Stanley now forecasts ASML sales of around €46.8 billion in fiscal 2027 (FY27), with earnings per share of roughly €45.7. That would imply earnings growth of about 57% year on year. Simpson said momentum should become clearer soon, with the analyst expecting "order intake over the next 2-3 quarters to confirm this strength."
He sees 2027 shaping up as ASML's strongest earnings year, driven by a sharp increase in demand for advanced lithography tools.
Simpson noted that the outlook is consistent with views from the firm's Asia technology team. "We see scope for 80 EUV tools in 2027," he wrote, supported by spending plans at customers such as TSMC, Intel and Samsung.
On the memory side, Morgan Stanley expects "a large catch-up in capacity buildout... following an exceptional pricing up-cycle." The bank also models around €15 billion in DUV system sales in 2027, alongside incremental revenue contributions from high-NA tools.
In valuation terms, Morgan Stanley said it is applying a multiple of 31 times earnings, which it described as "at the lower end of our usual cycle peak valuation range."
Barclays upgrades Dell on AI server momentum, enterprise recovery
Barclays this week upgraded Dell Technologies (NYSE:DELL) to Overweight (OW) from Equal Weight (EW), citing growing confidence in the company's position in AI servers alongside improving prospects in enterprise server and storage markets. The bank kept its price target unchanged at $148.
Analyst Tim Long said the upgrade reflects stronger visibility on upside. "We are encouraged by what we are seeing now and upgrading the name to OW from EW as we see more upside to come."
He said the decision is primarily driven by stronger-than-expected AI server orders and increased comfort with the margin profile of the business.
The analyst noted that while AI server gross margins remain under pressure, operating margins have held up better than previously expected.
"We are more positive on DELL given the strength in AI server orders, stability of AI op margins, expanding opportunities in enterprise server and storage, and DELL's consistent disciplined opex management," Long wrote.
Long pointed to Dell's plan to ship around $9.4 billion of AI servers in the fourth quarter, lifting full-year AI server shipments to roughly $25 billion. He now models AI order growth of 155% in fiscal 2026 and 60% in fiscal 2027.
Earlier concerns around the dilutive gross margin profile of AI servers have eased, the analyst said. While gross margins are still expected to remain in the high single-digit range, he said this is now largely understood by investors.
"[We] are encouraged that the company is managing to mid-single-digit op margins for the business," he added.
Outside AI, Long flagged a recovery in traditional enterprise server and storage demand. He said Dell is increasing the mix of its proprietary storage offerings and sees meaningful upgrade potential, with much of the installed base still running older-generation servers. Dell's supply chain capabilities should help it navigate the current commodity environment, he added.
HSBC upgrades EssilorLuxottica on AI smart glasses growth potential
Elsewhere, HSBC upgraded EssilorLuxottica (EPA:ESLX) to Buy from Hold and raised its price target to €340 from €300, arguing that faster adoption of AI-powered smart glasses is creating a meaningful new growth avenue for the group.
HSBC said early traction in Meta-led AI glasses has materially improved the long-term outlook for the category. As a result, the bank raised its estimate for the smart glasses total addressable market (TAM) by around one-third to roughly $200 billion by 2040.
Analysts pointed to advances in large language models that are enabling new hardware form factors, allowing real-time, voice-based interaction without the need to handle a smartphone.
While it remains "too early to call for a replacement cycle," the team led by Nicolas Cote-Colisson said smart glasses could progressively displace smartphones over the medium to long term as ergonomics, technology and social acceptance improve.
Against that backdrop, EssilorLuxottica is seen as a key beneficiary given its role in commercialising smart glasses for Meta and its leading position in eyewear.
The analysts said the higher TAM supports a sharp increase in EssilorLuxottica’s smart glasses volumes. They now forecast shipments of 35 million units in 2030, up from 18 million previously, and 57 million units in 2040, compared with a prior estimate of 48 million.
EssilorLuxottica remains the global leader today with about 70% market share, and HSBC argued that rising competition should help the market reach critical mass rather than undermine the opportunity.
"The more competition (20% ESLX share in 2040e), the more likely this market will gain critical mass and attract R&D efforts to the benefit of all players," the analysts wrote.
They added that EssilorLuxottica’s vertically integrated model and portfolio of brands such as Ray-Ban, Oakley and Supreme “should continue to provide a competitive advantage to the group despite the increase in competition.”
The upgrade reflects higher earnings expectations linked to smart glasses, with HSBC raising its EBIT forecasts for 2026 and 2027 and rolling its valuation forward by a year, implying roughly 23% upside.