Slowing smartphone demand is expected to hurt Apple (AAPL.O) and Qualcomm (QCOM.O) growth, according to J.P. Morgan analysts, who removed the companies off their list of most recommended stocks on Friday.
J.P Morgan Analysts warn that further coronavirus lockdowns in China and growing costs of commodities due to the Ukraine crisis could affect smartphone demand in 2022, prompting the removal from the brokerage’s “Analyst Focus List.”
Analyst Samik Chatterjee believes that a slowdown in gaming in China will weigh on Apple’s services, while a slowdown in consumer purchasing will temper higher expectations from the recent iPhone SE launch.
J.P Morgan gives it verdict on decreasing demand
According to the Nikkei newspaper on Monday, Apple is already planning to reduce iPhone and AirPod production due to a market slowdown.
Qualcomm, on the other hand, will likely face the brunt of the smartphone market’s difficulties for low- to mid-end Android handsets, according to Chatterjee.
Based on their longer-term potential, the brokerage continues to grade Apple and Qualcomm as “overweight” – the equivalent of a “buy” rating.
In a sluggish consumer demand climate, J.P. Morgan has added network equipment companies Arista Networks (ANET.N) and Ciena (CIEN.N) to its list in the expectation of more resilient demand for telecom and cloud-related investment.
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