Investing.com -- Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
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AI-driven iPhone 16 could kick off a supercycle for Apple: Wedbush
The AI-driven launch of the iPhone 16 in September could trigger a significant growth phase for Apple (NASDAQ:AAPL) over the next year, according to Wedbush analysts.
In a recent note, the investment firm projected that initial iPhone 16 shipments could surpass 90 million units, topping the original market expectations of 80 to 84 million units, and marking a double-digit increase year-over-year.
"We are seeing more indications across the Asia supply chain this iPhone upgrade cycle could be a historical one setting the stage for a supercycle as currently we estimate roughly 300 million iPhones globally have not upgraded in over 4 years,” the analysts noted.
"In our view, Apple could sell north of 240 million iPhone units in FY25 as this AI-driven upgrade cycle takes hold."
The analysts also stressed that China remains a crucial region for Apple's growth, with the iPhone 16 projected to generate renewed momentum in this vital market as the company moves into fiscal year 2025.
Since the WWDC event in early June, optimism has been growing within the Asia supply chain, with many anticipating that the iPhone 16 could herald a "golden upgrade cycle" for Apple, driven by pent-up global demand.
With the Apple Intelligence launch, the market is starting to recognize Apple’s potential to become the “gatekeepers of the consumer AI Revolution,” Wedbush stated.
Dell stock moved to Top Pick at JPMorgan (NYSE:JPM)
JPMorgan analysts named Dell Technologies (NYSE:DELL) as their new Top Pick earlier this week, citing the company’s strong potential for long-term growth, particularly in the AI server market and traditional infrastructure sectors.
In a note to investors, JPMorgan reiterated its Overweight rating on Dell, setting a new price target of $160 by December 2025.
The analysts noted that Dell's shares have lagged behind other AI-related stocks and the broader market, partly due to concerns about potential margin pressures in the AI server space. However, JPMorgan believes these concerns are exaggerated.
"The AI Server revenue opportunity remains large," the analysts wrote, suggesting that estimates for the AI server total addressable market (TAM) are likely to increase as cloud capital expenditure forecasts are adjusted upward.
They further highlighted that as customer adoption accelerates, revenue growth is expected to drive profit margins higher, particularly with a shift toward smaller cloud and enterprise companies anticipated to lead AI server purchases after 2026.
In addition to AI servers, JPMorgan sees strong prospects for Dell in traditional infrastructure and enterprise storage markets, with substantial revenue and margin opportunities.
While AI PCs have yet to become a significant driver of market expansion, the investment bank believes they could boost near-term revenue through higher volumes and pricing.
Wolfe Research cuts Qualcomm rating
Wolfe Research downgraded Qualcomm (NASDAQ:QCOM) shares to Peer Perform from Outperform and removed its price target for the stock, citing increasing concerns about the impact of Apple's internal modem on the chipmaker’s future revenue.
The analysts pointed out that while Qualcomm had previously minimized the potential threat, the landscape has now shifted.
"It's no surprise that AAPL has been pursuing a modem," Wolfe Research remarked, noting that Apple's earlier struggles led many to dismiss the possibility as a "boy who cried wolf" scenario.
However, Wolfe Research now indicates that recent checks suggest Apple's modem is indeed set to enter the market, which could pose a significant challenge to Qualcomm's business.
Qualcomm had earlier guided that it would supply modems for only 20% of the iPhone 18 models, but Wolfe's analysts now forecast a more substantial impact, beginning with the iPhone SE in the spring and expanding with the iPhone 17.
By the time the iPhone 18 is launched, Apple's modem is expected to be present in all phones outside the U.S.
"Despite QCOM's prior comments, we don't think this is fully in Street estimates - we're adjusting our numbers accordingly," analysts wrote.
The firm estimates that this development could result in a $4 billion revenue hit and a $1.50 EPS reduction between 2024 and 2026.
Although Qualcomm has made efforts to diversify, including a focus on AI handsets and IoT, Wolfe’s team remains cautious, suggesting that these areas will be a "tougher sell to investors."
Wells Fargo (NYSE:WFC) downgrades Snowflake shares on ‘meaningful’ narrative shift
Snowflake (NYSE:SNOW) stock also faced a downgrade by Wells Fargo analysts on Thursday, sending its shares lower in the market pre-open.
Wells Fargo downgraded Snowflake from Overweight to Equal Weight and reduced its price target from $200 to $130.
The analysts pointed to several growing challenges for the tech company.
"The narrative has shifted meaningfully," the investment bank’s analysts noted, highlighting concerns such as new management, increasing competition, and uncertainties surrounding the company's technological advantage.
A recent data breach has also raised alarms, with the analysts noting that "multiple breach-impacted customers" are considering moving away from Snowflake, including some high-value accounts. This could lead to customer churn, further complicating the company’s outlook.
The downgrade comes ahead of Snowflake's Q2 earnings report, where only modest quarter-over-quarter growth is anticipated. Wells Fargo also raised concerns that new products may not yet contribute significantly to the company’s results, potentially leading to a "near-term air pocket on top-line growth."
With Snowflake shares still trading at a premium, Wells Fargo sees limited upside potential in the short term, suggesting that the stock is likely to remain "range-bound until stabilization more clearly surfaces."
In addition, the analysts have lowered their revenue and earnings estimates for FY26 and FY27, adding to the cautious outlook.
Societe Generale identifies the ‘most vulnerable’ stock market to an AI trade reversal
In a recent report, Societe Generale analysts have identified Taiwan's stock market as the most vulnerable to a reversal in the AI trade.
They point out that Taiwan's equities, particularly in the semiconductor sector - a key component of the AI industry - are highly susceptible due to significant foreign ownership.
Foreign investors hold over 40% of Taiwan's equity market and are responsible for 80% of the average trading volume. However, since July, these investors have turned into net sellers, with outflows reaching USD 16 billion, reversing the positive trend seen in the first half of the year.
Societe Generale notes that this capital flight has been exacerbated by comments from former U.S. President Donald Trump about Taiwan's defense and chip industry, alongside the broader global equity sell-off since July 31.
In contrast, foreign outflows in South Korea - another major player in the semiconductor market - have been much lower, totaling just $300 million during the same period.
The concentrated foreign ownership in Taiwan’s semiconductor stocks, which constitute over 40% of the Taiwan Stock Exchange (TWSE) Index, makes the market particularly sensitive to shifts in the global AI trade momentum, according to the bank’s analysts.
Adding to the concerns, Societe Generale also points out that domestic support has been lacking, with local dealers and proprietary trading desks also being net sellers, further pressuring the country’s stock market.