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(This is CNBC Pro’s live coverage of Wednesday’s analyst calls and Wall Street chatter. Please refresh every 20-30 minutes to view the latest posts.) Two tech stocks were among the names being talked about by analysts on Wednesday. The Street reacted to Alphabet’s latest quarterly report, with many keeping a bullish outlook despite a premarket slide for the stock. Meanwhile, Goldman Sachs raised its rating on Spotify to buy. Check out the latest calls and chatter below. All times ET. 6:39 a.m. Morgan Stanley downgrades GM, cites ‘challenging’ industry fundamentals Morgan Stanley downgraded General Motors to equal weight from overweight, citing industry pressures and ongoing China and electric vehicle risks. “Shares are up ~90% from November and GM has been one of the strongest performing auto [original equipment manufacturer] stocks globally YTD,” wrote analyst Adam Jonas. “However, with minimal upside to our revised $47 price target and a relatively ‘balanced’ risk-reward between our $28 bear case …. and our $62 bull case, coupled with industry headwinds … we believe GM is more appropriately rated as EW,” he added. The downgrade from Morgan Stanley comes a day after the automobile company topped Wall Street’s second-quarter estimates. However, shares fell 6.4% as General Motors pushed out plans for its electric and autonomous vehicles and Wall Street raised concerns over its China business and a potential peak in earnings power. Shares looked poised to add to Tuesday’s losses, slipping about 2% in the premarket. The stock is up about 29% since the start of 2024. Among the headwinds General Motors faces, Jonas cited industry-related inventory issues, difficulties in China and a tough electric-vehicle market. –Samantha Subin 6:32 a.m. Wall Street weighs in on Tesla’s earnings, gross margin miss Some top Wall Street firms are bracing for downward pressure on Tesla shares following a disappointing second-quarter earnings report. “While the focus for Tesla currently is on its future growth endeavors, we believe the 2Q miss brings the focus back on fundamentals, at least for a brief moment,” wrote Barclays analyst Dan Levy, who has a $225 price target on the stock. Shares of the electric vehicle maker tanked nearly 8% premarket after second-quarter earnings fell short of estimates. Revenue topped expectations, but the company reported adjusted earnings of 52 cents per share, versus an LSEG estimate of 62 cents. Tesla also reported a year-over-year decline in automotive revenue and adjusted operating margins. “We expect modest pressure on the shares as the Q2 auto margin & [near-term] outlook commentary offset some of the momentum gained from the Q2 delivery beat,” Citi’s Itay Michaeli wrote. Michaeli retained his neutral rating but trimmed his price target to $258 from $274 a share, viewing new EV models and an upcoming Robotaxi event as critical catalysts for near-term sentiments. Bernstein’s Toni Sacconaghi, a long-time Tesla bear, maintained an underperform rating following the results – which suggested ongoing competition pressures and demand issues within Tesla’s auto business. His $120 price target reflects nearly 28% downside. “Tesla’s auto business does not appear to have found a bottom in terms of margins, we continue to expect little to no growth in 2024 and 2025, and believe that in general growth stocks only work when they grow,” he wrote, viewing the risk-reward over the long run as “unfavorable.” Goldman Sachs analyst Mark Delaney trimmed his price target to $230 from $248 a share on the heels of the results, reflecting about 7% downside from Tuesday’s close. He also lowered EPS estimates for this year, 2025 and 2026. “Until Tesla is able to begin production of new lower cost models, which the company expects in 1H25, we believe pricing/incentives could remain a key demand lever and weigh on margins,” he said. “We believe a key debate from here will be around the extent that new models are differentiated enough on price and/or features compared to current offerings to drive improved volume growth.” –Samantha Subin 5:54 a.m.: Wall Street stands by Alphabet, AI potential post-earnings Wall Street analysts remain bullish on the outlook for Alphabet , even after the stock fell on the back of its second-quarter results. “GOOGL believes AI Overviews are driving higher usage & engagement, & monetization is building,” wrote JPMorgan’s Doug Anmuth. “Importantly, we believe GOOGL’s strong 2Q Search results, combined w/ further positive commentary on AI Overviews, will allay near-term fears around market share & competition, though it will take time to work through long-term debates.” The commentary from Wall Street comes after the search giant beat quarterly estimates on the top and bottom lines, posting earnings of $1.89 per share and $84.74 billion in revenue. Shares, however, slipped about 3% as the company fell short on advertising revenue estimates for YouTube. Bank of America analyst Justin Post reiterated his buy rating and $206 price target in the wake of the print, saying that another solid quarter “reinforces [the firm’s] thesis that Google is a net AI beneficiary.” Goldman Sachs’ Eric Sheridan, meanwhile, noted that “away from any short-term debates (which might persist about the macroeconomic environment and/or nuances of this specific earnings report), we continue to view Alphabet as well-positioned against both the current … and potential future … computing landscapes.” The analyst retained his buy rating and upped his price target to $217 a share, reflecting about 19% upside. He expects discussions surrounding the future of search and long-term investments in data centers and other capital expenditures to drive investor discussions going forward. Despite the positive long-term outlook on shares, some analysts are bracing for some potential uncertainty and pressure in the second half as Alphabet faces difficult advertising comparisons. Jefferies analyst Brent Thill expects a deceleration in search, offset partially by Olympics and election content. “Despite the tougher comps, we expect GOOGL can grind higher in 2H thanks to continued strength in core Search, potential for Google Cloud to further accelerate on AI, and additional margin surprises,” he wrote. – Samantha Subin 5:54 a.m.: Goldman Sachs upgrades Spotify The sky’s the limit for Spotify after its latest quarterly report, according to Goldman Sachs. Analyst Eric Sheridan upgraded the audio streaming platform to buy from neutral. His price target of $425, up from $320, implies upside of more than 28% from Tuesday’s close. “SPOT is the clear global audio platform leader, which we expect to translate into elements of scaled compounded user growth, rising engagement across multiple format structure & pricing power for our operating forecast period,” Sheridan wrote. He added that, “coming out of its late 2023 operating costs restructuring, SPOT (in our view) is beginning to show much of the gross and operating margin trajectory that the company has discussed as medium/long term goals dating back over the last 3-5 years.” The upgrade follows Spotify reporting record quarterly earnings, sending shares up nearly 12%. That marked the stock’s biggest one-day gain since January 2023. SPOT 5D mountain SPOT 5-day chart — Fred Imbert
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