Top 5 Analyst AI Moves: Oracle Upgraded After Major Selloff; TD Cowen Picks New AI Stock of Choice

Investing.com - Here are the most important analyst moves in the AI sector this week.

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JPMorgan Upgrades Oracle Rating, Says Massive Sell-Off Reset Expectations

After Oracle Financial Software announced its latest earnings, JPMorgan upgraded its rating from Neutral to Overweight, stating that the significant decline in the stock has created a more attractive risk-reward profile.

The firm lowered its 2026 December target price from $230 to $210, noting that recent “severe sell-offs have improved the risk/reward ratio amid widespread investor pessimism.”

Since mid-September, Oracle’s stock has plummeted over 50%, while the S&P 500 and Nasdaq have remained roughly flat.

Analyst Mark Murphy said investor sentiment has shifted sharply, with expectations moving from optimism about long-term goals to “general pessimism,” which lowers the company’s execution hurdles.

Murphy also pointed out that Oracle’s recent issuance of $25 billion in bonds alleviates financing concerns and removes the need for additional bond sales in 2026.

He added that recent results also provide “incremental evidence supporting its rapid revenue acceleration and movement toward growth ranges, while maintaining double-digit revenue growth.”

The analyst emphasized that this rating upgrade does not rely on Oracle achieving its long-term growth targets. Instead, given the reset in expectations and valuation, the stock could perform well even under more moderate growth scenarios.

Oracle is currently trading at about 18 times its estimated 2027 GAAP EBIT, compared to approximately 20 times for large peers like Amazon, Microsoft, and Google.

TD Cowen Picks Favorite Stock, Optimistic About Strong AI Infrastructure Demand

TD Cowen initiated coverage on fiber-optic company Ciena with a Buy rating and named it one of its top picks, citing its positioning in AI-related network infrastructure.

The broker said Ciena is expected to benefit from growing demand for data center interconnects (DCI) and other optical transmission technologies related to the rapid expansion of AI infrastructure.

Led by Sean O’Loughlin, the analyst team wrote: “We believe Ciena is a key beneficiary of AI infrastructure demand, with a strong DCI position and recent acquisition of Nubis to enable data center internal connectivity.”

They noted that Ciena’s technological heritage and research-driven strategy have helped develop a fully integrated optical platform for telecom operators and cloud providers, supporting higher margins and long-term returns.

Ciena’s exposure to cloud customers has also increased, with direct cloud-related revenue reaching about 32% in the latest quarter, as hyperscale enterprises expand their transmission networks.

Analysts also highlighted growth opportunities in “cross-scale” networks connecting multiple data centers to support large AI workloads. They said this opportunity is closely related to traditional DCI, where Ciena already holds a strong market position.

The analysts wrote: “Ciena is involved in every expansion area and is insulated from many concerns we have in each. The clarity of Ciena’s bullish case led us to initiate a Buy rating and include it among our top picks.”

Susquehanna Raises Memory Stocks Target Prices Due to Price Improvements

Susquehanna analyst Mehdi Hosseini raised forecasts and target prices for several memory chip manufacturers ahead of Micron Technology’s fiscal Q2 results, citing stronger-than-expected pricing trends.

These revisions reflect improvements in the DRAM and NAND markets. Hosseini wrote: “Average selling prices for DRAM and NAND so far this quarter are significantly above our January expectations,” adding that this trend should continue into Q2 2026.

Hosseini raised Micron’s target price from $345 to $525 while maintaining a positive rating. Samsung Electronics’ target price was increased from 235,000 KRW to 275,000 KRW, and SK Hynix’s from 1,000,000 KRW to 1,050,000 KRW.

He maintained positive ratings for Micron, Samsung, and SanDisk, and a neutral rating for SK Hynix.

Among these, Hosseini said Samsung and SanDisk remain top picks, citing “renewed momentum in memory/contract manufacturing” and “workload-driven caching content support.”

Looking ahead, he expects DRAM prices to outperform NAND in the first half of 2026 but lag in the second half. He also noted that as AI spending shifts toward inference workloads, HBM4 could represent the peak for mixed DRAM pricing and margins.

Barclays Downgrades Adobe Rating Due to CEO Transition Uncertainty

Meanwhile, Barclays downgraded Adobe from Overweight to Hold after unexpectedly announcing that long-time CEO Shantanu Narayen will step down (though he will remain Chairman), citing increased uncertainty.

Analyst Saket Kalia said the firm is “holding a cautious stance on this stock,” citing weaker-than-expected Q1 metrics and leadership transition uncertainties.

Adobe’s Q1 net new annual recurring revenue (NNARR) was $400 million, below Barclays’ estimate of $460 million.

This shortfall was mainly due to pressure in Adobe Stock, where generative AI products like Firefly are changing monetization models. This shift “from high-ARPU subscriptions to lower-ARPU generative credit packs.”

Barclays noted that excluding this impact, ARR growth would be 11.2%, versus the reported 10.9%.

The firm maintained its FY2026 guidance and expects stronger net new ARR growth in the second half, driven by enterprise demand, monetization of 80 million monthly active users through freemium products, and increased use of generative credits.

However, Kalia said the CEO change is the main reason for the downgrade, implying the board “is seeking change, which may take time to implement.”

Barclays lowered Adobe’s target price from $335 to $275.

Baird Downgrades Wix to Neutral After Rapid Stock Rise

In another downgrade, Baird lowered Wix.com to Neutral after its stock surged nearly 40% in recent weeks, citing that this rally reduces near-term upside potential, driven by aggressive buybacks and strong Q4 results.

However, analyst Vikram Kesavabhotla said that as the company enters its “2026 investment year,” investors may remain cautious.

Wix’s outlook for FY2026 includes a “wider-than-normal range,” with Base44 representing “the biggest variable.”

As the business expands, higher incremental AI and marketing costs are expected, leading management to guide “significant compression in free cash flow margins for FY2026.”

Kesavabhotla said this investment could support long-term growth but warned that near-term uncertainty remains high.

He also noted mixed investor views on Base44. The analyst wrote: “Long-term sentiment on Base44 remains divided,” and added that Wix still needs to prove it can “effectively scale this asset.”

In the current AI-driven market environment, Baird warns that Wix “still represents a business type that investors are increasingly concerned about.”