Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
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Mizuho sees Apple stock as ‘out of favor long idea’
Mizuho desk analysts said Friday they view Apple Inc (NASDAQ:AAPL) stock as an "out of favor long idea," noting that negative headlines and concerns over declining iPhone sales have already been factored into the price.
They expect iPhone sales for fiscal 2025, particularly for the iPhone 16, to remain relatively stable, forecasting flat to low single-digit declines year-over-year—better than many fear.
According to the analysts, after a challenging period through March 2025, Apple's stock could rebound, driven by the preview of a new iOS in June and the release of a more AI-integrated iPhone 17 in September 2025.
“Patience will be rewarded, near-term downside risk [is] limited as buy-side super negative and short,” the analysts commented.
The team at Mizuho now anticipates a 6% decline in iPhone production for 2024, revising their estimate to 220 million units, down from the previous 90 million forecast for the iPhone 16 model.
Despite the downgrade for 2024, they project a recovery in 2025, with unit sales expected to rise by 8% to 239 million. This growth would be supported by the introduction of a new iPhone SE and the expected launch of the iPhone 17.
Looking further ahead, the forecast for 2026 suggests iPhone sales could reach roughly 250 million units.
The analysts also estimate that Apple’s upcoming iPhone 17 will sell around 97 million units in 2025, which represents a 10% increase over the revised estimate for the iPhone 16. Moreover, they foresee Apple starting to use its own internal modem chips with the iPhone 18, phasing out Qualcomm (NASDAQ:QCOM) modems by the time the iPhone 18 launches.
Apple is also expected to introduce a foldable iPhone in 2027, potentially spurring further investment in G6 OLED panels. Mizuho's team believes new AI features in iOS could drive stronger upgrade and replacement cycles beginning with the iPhone 17.
“Buyside feedback could not be more negative on AAPL and iPhone supply chain,” analysts continued.
“Feels like a lazy and super crowded short where buyside unit estimates for CY25 iPhone likely expect negative unit growth in low-single-digits year-on-year vs sell side consensus that was 5% growth and now likely flat year-on-year.”
Investors may question Tesla’s growth stock status: JPM
JPMorgan (NYSE:JPM) issued a cautionary note for Tesla Inc (NASDAQ:TSLA) on Thursday, adjusting its price target while still predicting a potential significant downside for the stock.
The bank maintained its Underweight rating on Tesla but raised the price target from $115 to $130. Still, the new price implies a downside risk of nearly 50% from Tesla’s last closing share price.
"TSLA shares fell -3.5% Wednesday vs. the S&P 500 flat, ostensibly upon the release of sales and production figures indicating 3Q global deliveries tracked modestly less than our estimate and in line with Bloomberg consensus but, from our conversations, may have represented more of a miss vs. investor expectations," JPMorgan stated.
JPMorgan also warned that Tesla might see its first-ever full-year decline in unit volumes, which could threaten its hypergrowth valuation.
Tesla's third-quarter deliveries of 464,000 units slightly missed JPMorgan's estimate but matched Bloomberg’s consensus forecast. However, analysts believe the figures may have underperformed relative to broader investor expectations.
"The continued softer trend now appears to position Tesla to potentially not grow full-year unit volumes for the first time in its history," JPMorgan explained, suggesting that this could prompt investors to reconsider Tesla's standing as a growth stock.
The report highlighted Tesla's resilience in the stock market, despite its deteriorating performance over the past two years.
"While TSLA shares are flat to slightly higher over the past two years, expectations have crumbled for every performance metric," the note pointed out, citing declines in unit volumes, revenue, gross margin, and free cash flow.
The analysts also stressed that Tesla's earnings before interest and taxes (EBIT) for 2024 are now forecasted at $7.3 billion—a sharp 74% drop from the $28 billion projected two years ago for the same period.
Upcoming AI event may ‘reinvigorate’ AMD stock: BofA
Bank of America (NYSE:BAC) (BofA) analysts reaffirmed their Buy rating for Advanced Micro Devices Inc (NASDAQ:AMD) stock ahead of the company’s “Advancing AI” event on October 10.
The analysts noted that AMD's previous AI event, held on December 6, led to significant stock gains of 19% and 80% over the following one and three months, respectively, outperforming the Philadelphia Semiconductor Index’s 10% and 37% increases during the same periods.
The upcoming event is expected to feature roadmap updates in AI and server CPU, alongside comments from key cloud customers, which “could reinvigorate AMD stock,” the analysts said. AMD has recorded a modest 9% year-to-date (YTD) increase, trailing behind the SOX index's 22% rise.
Despite growing competition in the AI accelerator market, BofA highlighted the potential for AMD to expand its market share. Consensus estimates project AMD’s AI sales to reach $5.1 billion in 2024, with the possibility of doubling to $10 billion in 2025.
The current consensus for AMD’s AI sales over the 2024-2026 period stands at $5.1 billion, $9.7 billion, and $12.8 billion, respectively, which suggests AMD’s market share in AI accelerators will likely stay around 5-7%. This is significantly lower than its 20%+ market share in consumer CPUs and gaming GPUs.
Although AMD has made strides in AI, BofA analysts cautioned that further expanding its market share could be difficult, given NVIDIA (NASDAQ:NVDA) Corporation’s commanding 80-85%+ market share and strong presence in cloud, along with competition from cost-optimized custom ASICs from companies like Broadcom (NASDAQ:AVGO) and Marvell (NASDAQ:MRVL).
However, if AMD demonstrates a viable strategy to capture more than 10% of the AI market share by 2026, it could add approximately $5 billion in sales, with potential earnings per share (EPS) in the range of $8-$9, compared to the current consensus of $7.37.
“Faster growth could also help AMD rerate towards 30-55x forward price-to-earnings (PE) it managed to trade during prior periods of rapid share gains and 40%+ annual sales growth,” BofA analysts said.
“We expect AMD to emphasize its improving end-end positioning including recent acquisitions (ZT Systems, Silo AI), open-source software (ROCm) and networking (infinity fabric),” they added.
SMCI still a ‘$1,000 stock’, says Loop Capital
Loop Capital analysts reiterated their bullish outlook on Super Micro Computer Inc (NASDAQ:SMCI) this week, maintaining a Buy rating and affirming that the stock is still on track to reach $1,000 (pre-10-for-1 stock split), despite recent news of a U.S. Department of Justice (DOJ) investigation.
In their note, Loop Capital downplayed the significance of the DOJ inquiry, which was first reported by The Wall Street Journal.
The analysts speculated that the investigation likely pertains to shipments to countries such as China and Russia but emphasized that this is unlikely to impact Super Micro’s ongoing operations.
“SMCI would be able to keep doing what it needs to do to get the 10-K filed while handling anything with the DOJ separately,” the analysts wrote.
They also pointed out that Super Micro might have already been aware of the DOJ probe. Although the company has yet to publicly acknowledge the investigation, Loop Capital noted that management seemed "constructive" during recent investor events in September, suggesting that the AI server maker could already be addressing the situation.
“We believe there is a legitimate possibility SMCI was already aware of anything that may now be going on with the DOJ,” the analysts added.
Loop Capital remains optimistic about Super Micro’s long-term prospects, projecting normalized revenues of $40 billion, with a return to 14% gross margins and 10% operating margins.
The analysts argue that these fundamentals could result in a $50 normalized earnings per share (EPS) and a price-to-earnings (P/E) multiple of 20x, supporting their view that SMCI is “a $1,000 stock.”
Northland upgrades Salesforce stock to Buy
Northland Capital Markets upgraded Salesforce Inc (NYSE:CRM) to Outperform following the launch of Agentforce, a platform integrating Agentic AI technology.
Northland highlights that Agentforce has not only matched Microsoft’s advancements in AI but may have surpassed them in terms of AI evolution. Officially rolled out on September 12th, the platform allows for the deployment of GenAI agents across sales, service, marketing, and commerce workflows.
Agentforce is powered by the Atlas reasoning engine and the xLAM series of Large Action Models. This technology eliminates the need for coding to build agents on the platform.
In addition, the system’s ability to transfer tasks to human agents when dealing with complex or ambiguous scenarios is seen as a key innovation, ensuring high levels of relevance and accuracy in its autonomous agents.
Northland Capital Markets also mentioned the platform’s pricing model, which is based on consumption and averages $2 per conversation. This structure is designed to capture part of the value that GenAI delivers to customers.
The analysts expect this development to significantly expand Salesforce’s total addressable market (TAM) for software from $0.8 trillion to $3.2 trillion, representing a four-fold increase.
“We believe CRM is well positioned to capitalize on the more than 4x in software TAM we expect GenAI will drive,” Northland’s team wrote in its report.
The firm extended its discounted cash flow (DCF) forecast from 8 years to 13 years, showing confidence that Salesforce is no longer constrained by average revenue per user (ARPU) limitations.
As a result, Northland Capital Markets raised its 12-month price target for Salesforce to $400, up from $270.