Inside the Market’s roundup of some of today’s key analyst actions
Continuing to see the “AI Revolution” as the “biggest tech transformation in over 40 years,” Wedbush analyst Dan Ives is touting Palantir Technologies Inc. (PLTR-Q) and Salesforce Inc. (CRM-N) as the best software stocks to take advantage of the trend.
“The start of this $2 trillion of AI spending all began with the Godfather of AI Jensen and Nvidia as they are the only game in town with their chips the new gold and oil,” he said. “The stalwart cloud/hyper scale players have been another instrumental part of this first key phase of the AI Revolution being led by Microsoft and now also seeing Google (GCP) and Amazon (AWS) finding major cloud and AI momentum.
“Now the time has come for the broader software space to get in on the AI Party as we believe the use cases are exploding, enterprise consumption phase is ahead of us beginning in 2025, launch of LLM models across the board, and the true adoption of generative AI will be a major catalyst for the software sector and key players to benefit from this once in a generation 4th Industrial Revolution set to benefit the tech space. The AI Software era is now here in our view. We believe the two best software plays on the AI Revolution into 2025 remain Palantir and Salesforce...with many well positioned vendors joining the AI Party (still 10 pm that goes till 4 am) like Oracle, IBM, Snowflake, MongoDB, Elastic, Pegasystems.”
In a research note released Thursday titled Software AI Era of Growth on the Horizon; Palantir, Salesforce Leading the Way, Mr. Ives reiterated his ratings and target prices for both companies. They are:
* Palantir with an “outperform” recommendation and US$75 target (Street high). The average is US$44.40.
Analyst: “With AI spending expected to ramp significantly within IT budgets in 2025, we believe the Messi of AI Palantir is in a prime spot to continue expanding its pipeline/deal flow while providing more use cases coming forward to address critical problems across industries and empower data-driven decision-making with a comprehensive suite of AI/ML solutions. Palantir has been a major focus during the AI Revolution with expanding use cases for its marquee products leading to a larger partner ecosystem with rapidly rising demand across the landscape for enterprise-scale and enterprise-ready generative AI. This will be a major growth driver for the U.S. Commercial business over the next 12 to 18 months as more enterprises head down the AI path with Palantir. We believe Palantir has a credible path to morph into the next Oracle over the coming decade with AIP leading the way as many on the Street continue to be huge skeptics of the Messi of AI.”
* Salesforce with an “outperform” recommendation and US$425 target. The average is US$401.20.
Analyst: “With the AI Revolution entering the software phase heading into 2025, CRM is well-positioned to capture its fair share of market expansion as the AI monetization phase will catalyze CRM’s growth over the next 12 to 18 months with a $7-trillion-dollar digital labor market opportunity on the horizon for CRM. With the goal of accelerating the path to building next-gen AI agents grounded in customer data to lower costs and increase automation for businesses, Agentforce 2.0 is looking to enable AI to perform advanced actions for humans with elevated trust layers built in for agents paving the way for a new era of digital labor. We believe CRM is a clear 2nd derivative beneficiary of the AI Revolution that could add $80 per share to the CRM story as this monetization story takes shape over the next 12 to 18 months with Benioff & Co. leading the charge and this new era of AI growth.”
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In a separate report, Mr. Ives raised his target for Apple Inc. (AAPL-Q) shares, believing “a golden era of growth for Cupertino is now on the horizon into 2025.”
“We believe Apple is heading into a multi-year AI driven iPhone upgrade cycle that is still being underestimated by the Street,” he said. “Rome wasn’t built in a day and neither will Apple’s AI strategy but the seeds of that strategy with Apple Intelligence are now forming and will transform the Apple consumer growth narrative over the coming years. We estimate that with hundreds of apps in development around Apple Intelligence that in essence creates a new multi-billion annual Services revenue stream will be another growth catalyst along with catalyzing iPhone upgrades across the board over the next 12 to 18 months. We believe Apple is on pace to reach the $4 trillion market cap threshold and be the first member of this exclusive club.”
The analyst thinks Apple’s “AI 18.2 rollout” over the coming months will start “a new era” for the tech giant “as ultimately hundreds of AI driven apps get built by developers on top of the building blocks of Apple Intelligence.”
“This will be a multi-year AI journey that will define the future for Apple with its next generation chip architecture, hardware releases, and future iPhone models built around the AI foundation that many consumers will ultimately embrace,” he added. “18.2 is a much more important AI release as this update includes Genmoji, front and center ChatGPT integration in Siri, Visual Intelligence, image playground, and other AI features. As Cook & Co. discussed in detail at WWDC in June this will be a multi- year process with Apple driving AI into its unparalleled installed base.”
He also touted “further indications across the Asia supply chain that this iPhone upgrade cycle could be a historical one setting the stage for a supercycle.” He’s currently estimating roughly 300 million iPhones globally have not upgraded in over 4 years and Apple could sell more than 240 million units in fiscal “as this AI-driven upgrade cycle takes hold and this will be the highest iPhone unit sales year in Apple’s history.”
“We believe there are 100 million Chinese iPhones in the window of an upgrade opportunity alone for 2025,” he added.
Reiterating his “outperform” recommendation, Mr. Ives moved his Street-high target to US$325 from US$300. The average is US$243.85.
“We believe many bears and long time Apple naysayers that have missed the last $1 trillion+ upward move in market cap for Apple have miscalculated three very important dynamics of the Apple story: 1) unmatched installed base of over 2 billion iOS devices and 1.5 billion iPhones with ~300 million iPhones in the window of an upgrade opportunity, 2) Services business worth $2 trillion of valuation which is increasing its monetization of the customer base, 3) consumer AI will go through Apple’s ecosystem with over 20 per cent of the world’s population ultimately interacting with AI on an Apple device the next few years. We believe the success of iPhone 16 with a strong holiday season in tow will be the launching pad for a renaissance of growth in Cupertino over the next 12 to 18 months that kicks off in this December quarter,” he said.
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Citi analyst Alexander Hacking sees Ivanhoe Mines Ltd.’s (IVN-T) 2025 target of almost 600,000 tons from its Kamoa-Kakula Copper Complex in the Democratic Republic of the Congo as “achievable,” pointing to current mining and processing rates but noting it “requires higher grades into the Phase 3 concentrator, which did improve in October.”
“In 2026 and beyond, more than 600,000 tons per year copper is targeted with incremental mill throughput, improved recoveries from Project 95 (up 30,000 tons per year), and smelter ramp-up,” he added. “Debottlenecking efforts on Phase 3 are expected to help achieve 20-per-cent above combined nameplate mill throughput (14,2000 to 17,200 tons per year) – all initiatives are expected to be found in the 2025 IDP, including Phase 4 expansion. Dividends from Kamoa-Kakula are anticipated in 2025.”
Citing the firm’s lower copper price forecast, Mr. Hacking did cut his 2024 earnings per share projecting to 19 cents from 24 cents and his 2025 expectation to 45 cents from 58 cents.
However, he maintained his “buy” recommendation and $24 target for the Vancouver-based company’s shares. The average on the Street is $25.42.
“We remain at Buy/High Risk on IVN based on upside from Western Foreland,” he said. “Note: Valuation on current production is US$69,000/ton ($17-billion/ 600kt x 40 per cent), which is relatively high but WF offers a credible path to double attributable production, in our view.”
“Citi is long-term bullish copper, and we believe IVN offers investors the best growth profile in our global coverage.”
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