3 Tech Stocks Wall Street Upgraded Last Week, and the One I'd Buy First | The Motley Fool

Last week, three technology stocks received upgrades from Wall Street: Microsoft (MSFT), Palantir Technologies (PLTR), and Marvell Technology (MRVL). As of now, Marvell has experienced a remarkable 224% increase in its stock price year-to-date, while Palantir has risen by 17%, and Microsoft has lagged behind the S&P 500's 14% gain.

Each of these companies has promising growth prospects and could serve as strong long-term investments, but Marvell stands out for its favorable growth potential relative to its price.

On October 5, analyst Ben Reitzes from Melius Research upgraded Microsoft from a hold to a buy rating, setting a price target of $665. This target suggests a potential upside of approximately 25% from its current share price. Reitzes believes that Microsoft’s cybersecurity offerings will gain traction due to increasing concerns surrounding AI safety and the growing adoption of AI agents. During the company’s fiscal fourth-quarter earnings call in July, CEO Satya Nadella emphasized the benefits of Agent 365, which extends security tools to AI agents. Currently, nearly 40 million agents are registered on this platform, showcasing Microsoft's competitive advantage stemming from its established relationships with major enterprises.

Microsoft's Azure cloud service continues to thrive amid rising demand, with revenue from Azure and other cloud services increasing by 43% year-over-year in fiscal Q4 2026, which concluded in June. The company's management noted that demand is still outpacing capacity. The stock is currently trading at 27 times its projected earnings for fiscal 2027, with analysts anticipating an annual earnings growth rate of around 15% in the forthcoming years, resulting in a price-to-earnings-to-growth (PEG) ratio of 1.8. The primary risk for Microsoft lies in its ability to expand data center capacity, which requires substantial investment and could impact margins and earnings. Nevertheless, a slightly higher price-to-earnings ratio combined with ongoing business growth makes the $665 price target plausible within the next year, offering potential gains for long-term investors.

On October 8, Goldman Sachs analyst Gabriela Borges upgraded Palantir from neutral to buy, establishing a price target of $230, indicating about a 10% upside from its current price. Palantir’s stock has surged roughly 65% in the past three months, and Borges foresees additional growth as companies increasingly aim to manage their own data and AI models, which should drive demand for Palantir’s tailored applications for each enterprise client.

This trend complements Palantir's existing trajectory. The company's Artificial Intelligence Platform (AIP) enables businesses to develop and operate AI models using their proprietary data, appealing to customers who prefer to retain full control over their data rather than using it to train external AI models. Management has provided guidance for full-year 2026 revenue of approximately $8.1 billion, reflecting an 82% increase from 2025. Analysts predict annual earnings growth of 53% in the coming years, although the stock currently trades at a forward earnings multiple of 123, leading to a PEG ratio of 2.3. While Palantir is part of my investment portfolio, I am cautious about its ability to reach the analyst's price target in the near term, especially when compared to Marvell’s more attractive valuation in relation to expected growth.

If I were to invest additional funds among these three stocks, my choice would be Marvell. On October 7, TD Cowen analyst Sean O'Loughlin upgraded Marvell from hold to buy with a price target of $350, suggesting around 27% upside from the current share price. This upgrade follows Marvell's Investor Day on October 6, 2026, where management emphasized the strong momentum in its connectivity segment, which includes the chips and optics that facilitate data movement within AI data centers. O'Loughlin noted that risks associated with Marvell’s custom chip business are diminishing, as these risks were primarily tied to low margins and reliance on a limited number of customers.

During the investor day event, CEO Matt Murphy raised the company's revenue forecast for fiscal 2028 to approximately $20 billion. He indicated that the transition from AI training to inference, along with the use of AI agents, will stimulate demand for connectivity equipment, with optics already showing accelerated growth, supporting the analyst's perspective. Marvell is also well-positioned to capture a growing share of AI infrastructure spending through its custom silicon business, which develops chips tailored for specific tasks, such as those required for cloud providers' AI workloads. This segment is expected to expand from $1.5 billion in revenue in 2025 to $12 billion by fiscal 2029.

Currently, Marvell trades at 65 times the earnings estimates for 2027, with analysts forecasting an impressive annual earnings growth rate of 49% in the upcoming years. With the lowest PEG ratio of the three at 1.3, Marvell presents a compelling case for reaching the analyst's price target within the next year, while also offering the potential for substantial returns for investors who choose to buy and hold.