Wall Street Analysts Upgrade AI Stocks Including Nvidia, ASML and Dell

TLDR

• Wolfe Research named Nvidia its top AI pick for 2026, replacing Micron on its Alpha List, citing 36% stock gains that lag other AI names
• Morgan Stanley projects Microsoft will capture more GenAI spending in 2026, with 80% of CIOs planning to deploy Microsoft 365 Copilot
• Morgan Stanley raised ASML price target 40% to €1,400, expecting earnings to grow 57% year-over-year in 2027
• Barclays upgraded Dell to Overweight based on AI server momentum, with Q4 AI server shipments expected at $9.4 billion
• HSBC upgraded EssilorLuxottica to Buy, raising smart glasses market estimate to $200 billion by 2040

Wall Street analysts made several moves this week across the artificial intelligence sector. The changes reflect growing optimism about AI spending and hardware demand heading into 2026.

Wolfe Research added Nvidia to its Alpha List as the firm’s top AI pick for 2026. The chip maker replaced Micron on the list. Analyst Chris Caso noted Nvidia stock rose 36% over the past year but trailed other AI-related companies.

NVIDIA Corporation, NVDA

Caso identified three factors that held back the stock. These included the delayed Blackwell launch, worries about AI spending sustainability, and concerns about losing market share to custom AI solutions. Those concerns are now easing as Nvidia’s product cycle moves forward.

Blackwell is ramping up fully and Rubin remains on schedule for a second-half 2026 launch. Rubin delivers five times better inference performance compared to Blackwell. Nvidia’s latest outlook suggests at least $40 billion in upside to consensus revenue estimates for 2026.

The analyst noted improved pricing for Blackwell Ultra and Rubin. Competition remains limited with Google’s TPU representing Nvidia’s main rival. Other custom AI platforms have not scaled at a comparable pace.

Nvidia trades at 23 times Wolfe’s 2026 earnings estimate. This sits well below the stock’s five-year average valuation.

Microsoft Leads Enterprise AI Adoption

Morgan Stanley’s fourth quarter 2025 CIO survey showed Microsoft positioned to capture more generative AI spending. Analyst Keith Weiss said the company remains in pole position to gain IT budget share as GenAI adoption increases.

CIOs expect software budgets to grow 3.8% in 2026 compared to 3.7% in 2025. Microsoft ranks as the number one share gainer of IT spending due to cloud migration trends. This applies to both one-year and three-year timeframes.

The survey found 92% of CIOs expect to use Microsoft’s GenAI products over the next year. This compares to 95% a year earlier. CIOs reported 53% of application workloads currently run on Azure.

Plans for Azure AI services remain strong. Some 37% of CIOs plan to use Azure OpenAI Services and 42% expect to adopt GitHub Copilot within 12 months. Microsoft 365 Copilot adoption is also rising with 80% of CIOs planning deployment over the next year.

ASML Target Raised on Strong 2027 Outlook

Morgan Stanley increased its ASML price target by 40% to €1,400. The move reflects expectations for stronger 2027 earnings as semiconductor capital spending accelerates.

Analyst Lee Simpson projects ASML sales of around €46.8 billion in fiscal 2027 with earnings per share of roughly €45.7. This represents 57% earnings growth year-over-year. Simpson expects order intake over the next two to three quarters to confirm this strength.

The analyst sees scope for 80 EUV tools in 2027. This is supported by spending plans at TSMC, Intel and Samsung. Morgan Stanley expects a large increase in memory capacity buildout following a strong pricing cycle.

The bank models around €15 billion in DUV system sales in 2027. High-NA tools will provide additional revenue contributions.

Dell and EssilorLuxottica Upgraded

Barclays upgraded Dell Technologies to Overweight from Equal Weight. Analyst Tim Long cited stronger AI server orders and improving enterprise server and storage prospects. The firm kept its price target at $148.

Dell plans to ship around $9.4 billion of AI servers in the fourth quarter. This lifts full-year AI server shipments to roughly $25 billion. Barclays now models AI order growth of 155% in fiscal 2026 and 60% in fiscal 2027.

AI server gross margins remain under pressure but operating margins held up better than expected. Dell is managing to mid-single-digit operating margins for the business.

HSBC upgraded EssilorLuxottica to Buy from Hold and raised its price target to €340 from €300. The bank cited faster adoption of AI-powered smart glasses. HSBC raised its estimate for the smart glasses market to roughly $200 billion by 2040.

The bank now forecasts shipments of 35 million units in 2030 and 57 million units in 2040. EssilorLuxottica holds about 70% market share today with brands including Ray-Ban and Oakley.

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