5 Major Analyst AI Developments: JPMorgan Signals Significant Downside Risk for Tesla Stock

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This week, several significant updates emerged from analysts regarding notable companies in the artificial intelligence (AI) sector.

Mizuho Calls Apple Stock an ‘Out of Favor Long Idea’

According to Mizuho analysts, Apple Inc.’s stock is regarded as an "out of favor long idea." They believe that recent negative headlines and concerns regarding declining iPhone sales have already been reflected in the stock price. The analysts anticipate that iPhone sales, particularly for the iPhone 16 in fiscal 2025, will remain relatively stable, projecting flat to low single-digit declines year-over-year, which is better than some market fears suggest.

Following a challenging period through March 2025, they expect a rebound in Apple’s stock, spurred by the preview of a new iOS in June and the release of a more AI-focused iPhone 17 in September 2025. The analysts noted, “Patience will be rewarded, near-term downside risk is limited as buy-side sentiment is super negative and short.”

Mizuho predicts a 6% decline in iPhone production for 2024, lowering their estimate to 220 million units. However, they foresee a recovery in 2025 with unit sales rising by 8% to 239 million, supported by the introduction of a new iPhone SE and the anticipated launch of the iPhone 17. Looking ahead to 2026, they suggest iPhone sales could approach around 250 million units.

Additionally, they estimate the forthcoming iPhone 17 could sell approximately 97 million units in 2025, marking a 10% increase over the revised estimate for the iPhone 16. They also predict Apple will start using its own modem chips with the iPhone 18, phasing out Qualcomm modems by its release.

Concerns for Tesla’s Growth Stock Status: JPMorgan Analysis

JPMorgan issued a caution regarding Tesla Inc., adjusting its price target while anticipating considerable downside potential for the stock. They maintained an Underweight rating and increased the price target from $115 to $130, indicating a nearly 50% downside risk from Tesla’s previous closing share price.

The bank noted that TSLA shares fell by 3.5% recently, attributed to sales and production figures that showed third-quarter global deliveries slightly underperforming estimates. Furthermore, they warned that Tesla might witness its first-ever full-year decline in unit volumes, potentially jeopardizing its hypergrowth valuation.

Despite the stock’s resilience in the market, analysts have observed declines in key performance metrics, including unit volumes, revenue, gross margin, and free cash flow. Working estimates for Tesla’s earnings before interest and taxes (EBIT) for 2024 are forecasted at $7.3 billion, a substantial drop from earlier projections of $28 billion.

Upcoming AI Event Might ‘Reinvigorate’ AMD Stock: BofA’s Take

Bank of America analysts have reiterated a Buy rating for Advanced Micro Devices Inc. ahead of its "Advancing AI" event scheduled for October 10. They highlighted that AMD’s previous AI event resulted in substantial stock gains, indicating potential for similar results this time.

The upcoming event is anticipated to include updates on AI and server CPU roadmaps, alongside insights from major cloud customers, which the analysts believe could bolster AMD’s stock. Although AMD has had a modest 9% year-to-date increase, it lags behind the broader semiconductor index’s performance.

The analysts expect AMD’s AI sales to hit $5.1 billion in 2024, potentially doubling by 2025. They caution, however, that capturing a larger market share may be challenging given the dominance of a key competitor.

If AMD can achieve over 10% of the AI market share by 2026, it could add approximately $5 billion in sales, significantly boosting its earnings potential.

Loop Capital Maintains Bullish Outlook for SMCI

Loop Capital analysts continue to express confidence in Super Micro Computer Inc., maintaining a Buy rating and asserting that the stock is positioned to reach $1,000 (pre-10-for-1 stock split), despite a recent U.S. Department of Justice investigation. They consider the DOJ inquiry to be minor and unlikely to hinder ongoing operations.

Loop Capital speculates that the investigation may relate to shipments to certain countries but believes Super Micro is well-equipped to handle the situation. The analysts project normalized revenues of $40 billion and a return to healthy gross and operating margins.

Their optimistic forecast suggests that strong fundamentals could lead to a normalized earnings per share of $50, supporting their valuation of SMCI as a “$1,000 stock.”

Salesforce Stock Upgrade by Northland Capital

Northland Capital Markets has upgraded Salesforce Inc. to Outperform following the introduction of Agentforce, a platform employing advanced AI technology. They believe this platform not only matches but may exceed recent AI advancements made by competitors.

Officially launched in September, Agentforce allows for the deployment of AI agents across various business workflows and significantly expands Salesforce’s total addressable market. The analysts have adjusted their price target for Salesforce to $400, an increase from $270, reflecting strong confidence in the company’s growth potential moving forward.

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