Investing.com — Here are analysts' biggest trends in the artificial intelligence (AI) space this week.
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AI-powered iPhone 16 could spark Apple's super cycle: Wedbush
The launch of the AI-powered iPhone 16 in September could kick off a major growth phase for Apple (NASDAQ:) over the next 12 months, according to Wedbush analysts.
In a recent note, the investment firm predicted that initial shipments of the iPhone 16 will exceed 90 million units, beating initial market expectations of 80 million to 84 million units and marking double-digit growth year-over-year.
“We are seeing further signs across the Asian supply chain that this iPhone upgrade cycle could be historic, setting the stage for a super cycle, with us now estimating that roughly 300 million iPhones worldwide have not been upgraded in over four years,” the analysts noted.
“In our view, if this AI-driven upgrade cycle takes hold, Apple could sell over 240 million iPhones in FY25.”
Analysts also highlighted that China remains a key region for Apple's growth, with the iPhone 16 expected to generate new momentum in this key market as the company enters fiscal 2025.
Optimism has been growing within the Asian supply chain since the WWDC event in early June, with many expecting the iPhone 16 to herald a “golden upgrade cycle” for Apple given rising global demand.
With the launch of Apple Intelligence, the market is beginning to recognize that Apple has the potential to be the “gatekeeper of the consumer AI revolution,” Wedbush said.
Dell Stock is JPMorgan's Top Pick
JPMorgan analysts named Dell Technologies (NYSE:) as their new top pick earlier this week, noting the company's strong long-term growth potential, particularly in the AI server market and the traditional infrastructure sector.
In a note to investors, JPMorgan reaffirmed its overweight rating on Dell and set a new price target of $160 by December 2025.
Analysts have said Dell's stock has lagged other AI stocks and the broader market in part because of concerns about potential margin pressures in the AI server sector, but JPMorgan believes those fears are overblown.
“The AI server revenue opportunity remains large,” the analysts wrote, suggesting that estimates of the AI server total addressable market (TAM) are likely to increase as cloud capital spending forecasts are revised upward.
Additionally, as customer adoption accelerates, growing revenues are expected to drive margins upwards, highlighting that small cloud and enterprise companies are expected to lead AI server purchases, especially from 2026 onwards.
In addition to AI servers, JPMorgan sees great potential for Dell in the traditional infrastructure and enterprise storage markets, where it sees significant revenue and profit opportunities.
While AI PCs have yet to become a major driver of market expansion, investment banks believe they could boost short-term revenues through increased sales volumes and pricing.
Wolf Research downgrades Qualcomm
Wolf Research downgraded Qualcomm (NASDAQ:) shares to Peer Perform from Outperform and withdrew its price target, citing growing concerns about the impact of Apple's built-in modems on the chipmaker's future revenue.
Analysts said Qualcomm had previously downplayed the potential threat, but that this has now changed.
“AAPL's work on modems is not surprising,” Wolf Research said, noting that Apple's struggles to date have led many to dismiss the possibility as a “boy cried wolf” scenario.
However, Wolf Research points out that recent research suggests that Apple's modem is indeed on the way to market, which could pose a major threat to Qualcomm's business.
Qualcomm had previously said it would supply modems for only 20% of iPhone 18 models, but Wolf analysts now predict a larger impact, starting with the iPhone SE in the spring and expanding to the iPhone 17.
By the time the iPhone 18 is released, Apple's modems will be in all of its phones outside the US.
“Despite QCOM's earlier comments, we believe this was not fully included in market expectations and are adjusting the figures accordingly,” the analysts wrote.
The company estimates that this could result in a $4 billion revenue loss and a $1.50 EPS reduction between 2024 and 2026.
Qualcomm has tried to diversify, including by focusing on AI devices and the Internet of Things, but Wolf's team remains cautious, suggesting that these areas will be a “tough sell to investors.”
Wells Fargo downgrades Snowflake shares due to 'meaningful' narrative change
Snowflake (NYSE:) shares also faced a downgrade from an analyst at Wells Fargo on Thursday, sending the stock lower before the market opened.
Wells Fargo downgraded Snowflake to equal weight from overweight and lowered its price target to $130 from $200.
Analysts noted several growing challenges for the technology company.
“The situation has changed dramatically,” investment bank analysts wrote, highlighting concerns about new management, increased competition and uncertainty about the company's technological edge.
The recent data breach has also raised alarm, with analysts noting that “several customers impacted by the breach” are considering moving away from Snowflake, including high-value accounts, which could lead to customer exodus and further complicate the company's outlook.
The downgrade comes ahead of Snowflake's second-quarter earnings report, which expects quarterly growth to be modest. Wells Fargo also expressed concern that new products may not yet be a significant contributor to the company's performance, which could result in “a gap in near-term revenue growth.”
Snowflake's shares are still trading at elevated prices, and Wells Fargo sees limited upside potential in the near term, suggesting the stock is likely to “remain range-bound until stabilization becomes more apparent.”
Moreover, analysts are lowering their sales and profit forecasts for fiscal 2014 and 2015, becoming more cautious.
Societe Generale identifies stock markets 'most vulnerable' to AI-driven trade reversals
Taiwan's stock market is the most vulnerable to a reversal in AI trading, analysts at Societe Generale said in a recent report.
They point out that Taiwanese stocks, especially the semiconductor sector, a key component of the AI industry, are highly vulnerable due to high foreign ownership.
Foreign investors own more than 40% of Taiwan's stock market and account for 80% of average trading volume, but since July, they have become net sellers, with outflows reaching $16 billion, reversing the positive trend in the first half of the year.
Societe Generale said the capital flight had been exacerbated by the global stock sell-off since July 31, as well as comments by former U.S. President Donald Trump about Taiwan's defense and semiconductor industries.
In contrast, foreign outflows to South Korea, the other major player in the semiconductor market, were much smaller, totaling just $300 million over the same period.
Taiwan's semiconductor stocks, which account for more than 40% of the Taiwan Stock Exchange (TWSE) index, are heavily foreign-owned, making the market particularly sensitive to shifts in the momentum of global AI trade, the bank's analysts said.
Adding to the concerns, Societe Generale said there was a lack of support on the domestic side, with domestic dealers and proprietary trading desks also selling on the market, putting further pressure on the local stock market.
