5 big analyst AI moves: Apple-Baidu collaboration ‘driven by regulatory concerns’

Citi Attributes Apple-Baidu AI Collaboration to Regulatory Factors
Citi analysts recently focused on Apple’s partnership with Baidu, noting that their collaboration on AI initiatives is primarily motivated by regulatory concerns.
According to a report from the Wall Street Journal, Apple plans to integrate Baidu’s ERNIE Bot as the local large language model (LLM) provider for its forthcoming iOS18, with monetization occurring through API interfaces.
“If true, we believe the collaboration is mostly driven by regulatory concerns while Apple is reported to be in talks with Google and OpenAI amidst internal Gen-AI efforts for other markets,” commented Citi analysts.
“China published an AI regulation in 2023 where it requires generative AI models to be approved before launching to the public, and ERNIE is one of the 40 models already approved,” they added.

Wedbush Lifts Microsoft PT on Bullish Copilot Outlook
On Monday, Wedbush raised its price target for Microsoft Corporation to $500 from $475, while maintaining its outperform rating.
The firm remains bullish about Microsoft’s AI capabilities, particularly regarding Copilot’s financial prospects, observing a surge in AI adoption among Microsoft’s clients and industry leaders.
“We strongly view this as Microsoft’s ‘iPhone Moment’ with AI set to change the cloud growth trajectory in Redmond the next few years and our recent checks giving further confidence in this dynamic,” analysts noted.
The broker predicts that over 70% of Microsoft’s user base will integrate its AI functionalities within the next three years, potentially boosting the company’s revenue by an additional $25 billion to $30 billion by 2025.
However, it also highlighted several potential risks, including intensified competition, pricing strategies, technological changes, and economic challenges.

TSM Target Price Hiked at BofA on Advanced Nodes Strength
Bank of America (BofA) analysts raised their 12-month target price on Taiwan Semiconductor Manufacturing (TSM) to NT$880 (US$155) due to expectations of stronger structural demand for advanced nodes driven by AI strength, computing power, and power-saving requirements.
The analysts emphasized the increasing importance of advanced semiconductor nodes in meeting rising computing power demands highlighted by AI. They also noted TSMC’s industry leadership, especially with Intel outsourcing Lunar/Arrow Lake CPU tiles to TSMC.
BofA projects a 22% compound annual growth rate (CAGR) for industry-leading edge foundry services (sub-7nm) from 2023 to 2025.

BMO: ‘Adobe Still Has Longer-Term Growth Levers Across’
BMO Capital Markets analysts highlighted Adobe’s latest product innovations aimed at enhancing enterprise use cases within both its Creative Cloud and Experience Cloud offerings.
They reiterated an Outperform rating and a $610 price target on Adobe, viewing it as a forefront company in enterprise workflow solutions.
Meanwhile, KeyBanc analysts maintained an Underweight rating and a $445 price target on Adobe after the conference, noting the confusion surrounding Adobe’s FY24 targets.

Foundational AI Startups Roiled by Shakeout Events – Macquarie
Macquarie analysts noted a shakeout in the market for foundational AI models, impacting some AI startups.
They anticipate disruptions to continue as companies strive to keep up with rapid innovation.
Macquarie also highlighted Apple’s advancement in local generative AI research, foreseeing the iOS ecosystem employing a hybrid approach using both centralized and on-device AI capabilities.