Top AI Analyst Calls: BofA Backs Alphabet, Apple PT Up
Key Analyst AI Stock Updates: BofA Picks Top Performer, Apple Target Raised
InvestingPro offers premium news, AI stock selections, and advanced research tools—currently available at 55% off.
Alphabet Leads Next AI Era, Says Bank of America
Bank of America analysts highlight Alphabet as the premier stock positioned for the forthcoming stage of artificial intelligence development. This assessment comes as investor focus transitions from heavy capital expenditures to revenue generation, profitability, and lasting competitive edges.
The analysts emphasize that perceptions of AI capabilities, additional income streams, and capital expenditure returns will continue driving performance among mega-cap internet companies through 2026.
Although AI investments are surging, major cloud providers are producing ample operating cash flow to finance these internally, supplemented by targeted debt financing to maintain financial agility.
Alphabet excels across foundational models, custom silicon chips, enterprise cloud services, and consumer distribution channels, according to analysts Justin Post and Nitin Bansal in their recent report. This comprehensive strength grows more vital as the AI sector evolves and demands proof of enduring profitability.
Bank of America projects AI could generate over $1 trillion in new revenue over the next five years. Alphabet’s advantages stem from four key competitive barriers: leadership in advanced models, consumer reach, enterprise distribution, and proprietary chip technology.
Google’s parent company uniquely demonstrates robust positioning in all four domains, supported by Gemini model advancements, surging Tensor Processing Unit demand, expanding enterprise cloud operations, and diverse consumer platforms aiding AI training and commercialization.
Morgan Stanley Boosts Apple Price Target on Strong Earnings Outlook
Morgan Stanley has increased its Apple price target to $315 from $305 within a fresh 2026 forecast for North American IT hardware. The firm retains an Overweight rating and lists Apple among its top convictions for the coming year.
This adjustment accounts for enhanced long-term earnings potential, especially in fiscal 2027, despite escalating memory costs affecting the sector. Analyst Erik Woodring updated his FY27 EPS projection to $9.83 from $9.55, driven by optimistic revenue growth offsetting margin squeezes from DRAM inflation.
He trimmed FY27 product gross margin estimates by 160 basis points to account for elevated memory expenses. Nonetheless, Apple’s earnings durability relies on robust iPhone sales volumes and pricing power, which should counteract rising input costs.
Apple stands out among hardware firms with limited demand sensitivity to price hikes, ensuring revenue and earnings predictability. In Morgan Stanley’s 2026 sector recommendations, Apple joins Western Digital, Seagate Technology, TD Synnex, and Teradata in the core Overweight selections.
AI Valuation Risks Dominate 2026 Market Concerns
Deutsche Bank’s December global markets survey of 440 investors reveals AI-driven valuation risks as the foremost threat to stability in 2026. A striking 57% anticipate a tech stock selloff from waning AI hype as the primary danger, outpacing other macroeconomic or financial worries.
Strategist Jim Reid noted this unprecedented dominance: AI and tech bubble risks overshadow all else. The gap is significant; the next concern—a new Fed chair implementing aggressive rate cuts—drew only 27%.
Private capital market strains ranked at 22%, unexpected bond yield spikes at 21%, and inflation-prompted rate hikes at 15%. Despite prominence, U.S. tech bubble fears haven’t escalated much in 2025, remaining below 2021 peaks.
Morgan Stanley Recommends TSMC Exposure for 2026 AI Surge
Morgan Stanley advises bolstering Taiwan Semiconductor Manufacturing Company positions ahead of 2026, hiking the price target to NT$1,888 from NT$1,688 while upholding Overweight. Analyst Charlie Chan urges adding shares now.
The firm anticipates TSMC guiding mid-20% revenue growth for 2026 but forecasts closer to 30%, surpassing consensus 22%, fueled by $49 billion capex and 3nm capacity growth. Initial guidance may be cautious, but outperformance seems likely.
Morgan Stanley upgraded its AI foundry revenue growth to 60% CAGR through 2029, with the AI chip market hitting $550 billion. TSMC could capture $107 billion, or 43% of revenue. Updated 2026/2027 EPS estimates highlight attractiveness at 16x/13x multiples amid persistent AI demand.
Goldman Sachs Downgrades Texas Instruments and Arm Amid Chip Cycle Shifts
Goldman Sachs shifted Texas Instruments and Arm Holdings to Sell ratings, contending neither is optimally placed for the semiconductor upcycle’s next phase, even with sustained AI spending into 2026.
Analyst James Schneider anticipates rising hyperscaler AI investments benefiting digital, memory, storage, and equipment sectors. A slow industrial and auto recovery should aid analog chips, but selectivity will prevail.
Texas Instruments dropped from Buy due to execution challenges. Despite analog recovery prospects, strategic capacity decisions will hinder margins versus peers. Record inventories will dampen earnings rebound, with free cash flow shortfalls pressuring shares.
Arm fell from Neutral owing to smartphone royalty reliance (60%) and limited growth from fixed rates. Elevated AI R&D will erode financial leverage.
