Two Prominent AI Stocks Predicted to Decrease by 24% and 66% by Certain Wall Street Experts in 2025
Apple's stock, AAPL, has seen a significant 34% rise over the past year, majorly due to valuation multiple expansion rather than earnings growth. Recently, analyst Tim Long from Barclays expressed skepticism about the stock, setting a sell rating and a target price of $184 per share, implying a potential 24% drop from the current price of $243.
On the other hand, Tesla's shares have surged 66% in the same period. Unlike Apple, Tesla's growth is not based on solid business fundamentals but expectations of the company benefiting from President-elect Donald Trump's ties with CEO Elon Musk. Analyst Ryan Brinkman from J.P. Morgan reiterated his bearish stance, predicting a 66% drop from the current price of $395, keeping his target at $135 per share.
Apple's success is rooted in its position as the market leader in smartphones and its thriving services business. The company's brand authority has enabled it to generate higher margins through its services segment, which is growing more rapidly than its product segment. However, analysts' excitement over Apple Intelligence has not led to a significant iPhone upgrade cycle, causing concerns about the stock's valuation.
Tesla, on the other hand, holds a slim lead in electric car sales but faces challenges in manufacturing efficiency and market share. The company has a substantial opportunity in self-driving software and robotaxis. However, much of its valuation is based on these future revenue streams, making it a risky investment for those uncertain about the autonomous driving narrative.
Wall Street expects Apple's adjusted earnings to increase by 9% in fiscal 2025, while Tesla's adjusted earnings growth is anticipated to be 27% annually through 2025. These expectations have led to significant valuations for both companies, causing some analysts to caution investors about the potential risks.
In conclusion, both Apple and Tesla have their strengths and weaknesses. While some analysts see potential price decreases for both stocks, others remain bullish. Investors must carefully consider their risk tolerance andanalyze the companies' fundamentals before making investment decisions.
Despite the skepticism from some analysts, investing in Apple's stock might still offer a benefit due to its strong financial performance and market position. Tim Long from Barclays suggests selling Apple at $184, which is absurdly low given its current price of $243 and its 34% rise over the past year.
However, the volatility in Tesla's stock price is also a concern for finance analysts. Despite Tesla's 66% rise in the same period, analyst Ryan Brinkman from J.P. Morgan suggests selling the shares at $135, implying a potential drop of 66% from its current price of $395.
Investors should be aware of the risks associated with both stocks, especially given the high valuations based on future earnings and revenue streams. Analysts' predictions of Apple's 9% adjusted earnings growth in 2025 and Tesla's 27% annual earnings growth through 2025 have boosted the stocks' prices, but they also increase the potential for significant losses if the companies fail to meet these expectations.
Ultimately, investing in either Apple or Tesla requires careful analysis of their financial fundamentals and a deep understanding of the risks involved. Investors should consider their own risk tolerance and assess whether the potential benefits outweigh the potential losses before making a decision.
