Investing.com — Here are the biggest analyst moves in the area of artificial intelligence (AI) for this week.
Jefferies cuts to Underperform after supply chain checks show all-glass iPhone scrapped
Jefferies this week downgraded Apple to Underperform from Hold and its price target to $263.66 from $285.56 after supply-chain checks revealed Apple has canceled its planned all-glass iPhone due to poor production yield.
The 20th-anniversary all-glass model, expected to launch in September 2027, would have carried a blended retail average selling price (ASP) of $2,060, with Apple’s broader plan having been “to extend the all-glass features to future iPhone Pro and Pro Max models, further raising their ASP and margin.”
Its cancellation prompted Jefferies to cut its estimated compound annual growth rate (CAGR) for iPhone ASP between fiscal 2026 and 2031 to 6.8% from 9.0%, and trim fiscal 2028 and 2029 EPS estimates by 2.1% and 3.4% respectively.
With the all-glass model shelved, analysts led by Edison Lee said the foldable iPhone remains “the only key driver of higher ASP and margin” going forward. However, rising memory costs are expected to push the starting price of the iPhone 18 Fold to $2,199 for the 256GB version, climbing to $3,099 for the 2TB model.
“We still believe such an expensive phone would be a niche product,” the analysts wrote, forecasting 14 million unit sales in fiscal 2028.
Jefferies’ checks indicate Apple plans to raise DRAM in the iPhone 19 Pro Max to 16GB from 12GB, though only for that model, marking a sign of “still-limited breakthrough in Apple Intelligence,” the analysts said. If memory prices rise more than expected in fiscal 2027, they warned Apple could abandon the upgrade altogether, noting an additional 4GB of DRAM would add $60-70 to the bill of materials.
These 2 stocks are “extremely undervalued” after recent pullback: KB
KB Securities analyst Jeff Kim has called and “extremely undervalued” after both stocks retreated meaningfully from their previous peaks following forced unwinding of credit-leveraged positions.
Based on Wednesday’s close, Samsung trades at 3.7x 2027 estimated price-to-earnings (P/E) and SK Hynix at 3.2x, even as 2027 operating profit is forecast at 575 trillion won and 389 trillion won, respectively — 13.2x and 8.2x their 2025 levels. The gap between projected earnings growth and current valuations suggests “earnings improvements expected in 2027 have barely been priced in,” pointing to “substantial room for re-rating,” Kim wrote.
Near-term earnings are expected to inflect sharply. Samsung is projected to post third-quarter operating profit of 112 trillion won, up 817% year-over-year with a 55% operating margin, a record high for the fourth consecutive quarter.
SK Hynix is expected to post third-quarter operating profit of 77 trillion won, up 579% year-over-year, with a 78% operating margin. Both companies have committed more than 60% of output to five-year long-term agreements with hyperscalers amid rising memory prices.
Looking further out, the combined operating profit of Samsung and SK Hynix is projected to rise from 91 trillion won in 2025 to 641 trillion won in 2026 and roughly 964 trillion won in 2027, against a combined market capitalization of approximately 2,593 trillion won, a gap Kim said points to meaningful re-rating potential.
Shareholder returns were also flagged as a catalyst, with Samsung’s returns over the next three years expected to total at least 600 trillion won and a dividend yield above 7%, a level Kim believes “could serve as a powerful catalyst for inflows from global mega-funds.”
“We continue to favor SEC and SKH as our top picks,” he concluded.
New Street upgrades to Buy, says current run “breaks from industry cycles of recent decades”
In another bullish memory move, New Street Research has upgraded Micron to Buy with a $1,250 price target, arguing the chipmaker’s current run breaks from the industry’s historical boom-and-bust pattern.
“Micron’s stock is up more than 10x since its lows of April 2025, while its production value, measured by COGS, is up only ~25% since,” the broker noted. “What is happening today breaks from the industry cycles we have witnessed in recent decades.” The upgrade follows a research series New Street began in July examining whether the memory cycle is structurally different.
By 2030, New Street expects Micron to hold more than $600 billion in cash on the balance sheet and generate more than $150 billion in annual free cash flow. Looking beyond 2030, the firm models a milder downcycle than in past eras, with a trough of just $18 billion in free cash flow burn and more than $100 billion generated each year across a four-year downturn.
It expects memory demand to keep growing quickly, with AI accounting for two-thirds of the mix, and models 15% annual growth beyond 2030 against a 10% historical average over the past 20 years.
On valuation, New Street argued high-bandwidth memory (HBM) deserves a premium over the traditional three-to six-times cost of goods sold (COGS) range because it is structurally less cyclical than commodity DRAM. This combination implies a $2 trillion to $3 trillion market capitalization by 2030, it said.
HSBC cuts to Hold on valuation and lack of near-term catalyst
Earlier in the week, HSBC downgraded Cisco to Hold from Buy, cutting its price target to $120 from $137, saying that while fourth-quarter results were strong, the stock lacks a near-term catalyst. “Solid results but missing catalyst,” analyst Abhishek Shukla wrote, adding that the downgrade reflects “valuation and lack of positive catalysts.”
Fourth-quarter non-GAAP EPS of $1.22 came in 4% to 5% above estimates and up 23.2% year-over-year, with non-GAAP operating profit 6% above consensus. Cisco guided to fiscal 2027 revenue of $72.8 billion, a 15% increase and above the pre-results consensus of $68.8 billion, while its EPS outlook of $5.08 also topped expectations. HSBC raised its fiscal 2027-28 EPS estimates by 2% to 6%.
HSBC expects networking revenue to rise 24.2% in fiscal 2027, driven by 97% growth in the hyperscaler AI subsegment, before moderating to 12% in 2028 and 8% in 2029. Cisco booked $9.3 billion of hyperscaler orders in fiscal 2026, including $4 billion in the fourth quarter, with management expecting orders to be “meaningfully higher” this year.
Despite the strong near-term picture, the bank sees EPS growth peaking at 32% in the first quarter before easing to around 8% from fiscal 2028. Cisco trades at 20.9 times HSBC’s calendar 2027 estimates against a sector median of 21.4 times, a discount the bank considers warranted given slower long-term growth than peers.
JPMorgan initiates at Overweight, says AI disruption fears “overblown”
JPMorgan has initiated Salesforce at Overweight with a December 2027 price target of $250, arguing concerns weighing on the stock are “overblown” and that shares are pricing in further deceleration rather than progress toward the company’s Rule of 50 target.
Analyst Samik Chatterjee said the favorable view is underpinned by “an expected acceleration in the core business in 2HF27” and by the view that fears about disruption from frontier AI models and competition “should be limited to a small portion of the business.”
At the same time, he said the valuation “looks inexpensive,” currently pricing in further deceleration “rather than progress towards the Rule of 50 framework outlined by the company as a target for FY30.”
Chatterjee believes the primary driver of upside “will be led by a re-rating,” the magnitude and timing of which will depend on a revenue growth acceleration. But the analyst said that even without an acceleration, he sees upside “purely based on sustaining growth and margins,” arguing the inexpensive multiple “stands counter to low double-digit revenue growth, leading margins, and an established market-leading position in the CRM market with Enterprises.”