5 Major Analyst AI Moves: BofA’s Top Stock Pick for Next AI Boom & Apple PT Raised

• Bank of America (BAC) highlights Alphabet (GOOGL) as the best-positioned stock for the next phase of AI, citing its structural advantages across foundational models, custom silicon, enterprise cloud, and consumer distribution, with AI potentially unlocking over $1 trillion in incremental revenue over the next five years.
• Morgan Stanley (MS) recommends increasing exposure to TSMC (TSM) and raised its price target to NT$1,888/about $60, forecasting 30% revenue growth in 2026 driven by accelerating AI demand, while also lifting Apple (AAPL)’s target to $315 on stronger long-term earnings power despite memory cost pressures.
• Investor concerns about AI valuation risks dominate 2026 market outlooks, with 57% of Deutsche Bank’s (DB) survey respondents citing a potential sharp selloff in tech stocks as the top threat, while Goldman Sachs (GS) downgraded Texas Instruments (TXN) and Arm Holdings (ARM) to ‘Sell’ due to limited upside in the current semiconductor cycle.

The artificial intelligence sector continues to drive significant attention in equity markets, with analysts highlighting divergent opportunities and risks across key players, according to Investor.com. As investor focus shifts from aggressive capital expenditure to sustainable monetization and defensible competitive advantages, certain companies appear better positioned for long‑term value creation.

Bank of America (BAC) identifies Alphabet (GOOGL) as the strongest candidate for the next phase of AI development. The firm emphasizes Alphabet’s comprehensive strengths across foundational models through ongoing Gemini advancements, custom silicon via Tensor Processing Units with rising demand, enterprise cloud growth, and extensive consumer distribution channels. These factors provide structural moats that support durable leadership. Bank of America projects AI could generate over $1 trillion in incremental revenue opportunities across the industry over the next five years, with hyperscalers funding investments largely through internal cash flows and selective debt access to maintain flexibility.

In the semiconductor space, Morgan Stanley (MS) recommends increasing exposure to Taiwan Semiconductor Manufacturing Co. (TSM) ahead of 2026, raising its price target to NT$1,888 from NT$1,688 ($59.82 from $53.45) while maintaining an ‘Overweight’ rating. The firm anticipates TSMC’s 2026 revenue growth to approach 30% year-over-year, exceeding initial guidance in the mid-20% range and surpassing consensus estimates of around 22%. This outlook stems from accelerating AI demand and capacity expansion at advanced nodes like 3-nanometer. Morgan Stanley also forecasts the AI semiconductor foundry market to grow at a 60% compound annual rate from 2024 to 2029, potentially reaching $550 billion by 2029, with TSMC capturing roughly $107 billion in AI-related revenue—equivalent to about 43% of its total.

Morgan Stanley has also boosted its price target on Apple (AAPL) to $315 from $305, retaining an ‘Overweight’ rating and positioning it among the firm’s top conviction ideas for 2026. The adjustment reflects higher long-term earnings power, particularly in fiscal 2027, with earnings per share raised to $9.83 from $9.55. While memory cost inflation, especially DRAM, is expected to pressure hardware margins by approximately 160 basis points in fiscal 2027, Apple’s iPhone volumes and pricing power are projected to more than offset these headwinds. Apple is included in Morgan Stanley’s core ‘Overweights’ for the sector, alongside names like Western Digital (WDC), Seagate Technology (STX), TD Synnex (SNX) and Teradata (TDC).

Contrasting these positive outlooks, Goldman Sachs (GS) downgraded Texas Instruments (TXN) to ‘Sell’ from ‘Buy’ and Arm Holdings (ARM) to ‘Sell’ from ‘Neutral.’ The firm argues that while AI spending supports digital, memory, storage, and equipment segments, the broader semiconductor upcycle will feature greater stock discrimination. For Texas Instruments, company-specific factors such as high inventory levels and capacity decisions are seen as limiting margin and earnings recovery relative to peers. Arm’s exposure to smartphone royalties (around 60%) and elevated R&D for AI custom chips are viewed as constraining near-term upside.

Investor sentiment reflects caution on broader AI-related valuations. Deutsche Bank’s global markets survey of 440 participants in mid-December found that 57% identified a sharp selloff in technology stocks due to fading AI enthusiasm as the top risk for 2026 – far ahead of other concerns like aggressive Federal Reserve rate cuts (27%) or private capital market stress (22%). Despite this, the survey indicates that perceptions of a U.S. tech bubble have not intensified significantly in 2025 compared to prior peaks.

These developments underscore a maturing AI landscape where execution, competitive positioning, and returns on investment increasingly differentiate winners. While hyperscalers and leading foundries show resilience, selective hardware and non-AI-centric semiconductor names face more scrutiny as the cycle progresses.

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