According to Atlantic Equities, Warner Music Group is not immune to the rise of artificial intelligence in the recording industry. The company downgraded Warner Music’s rating to neutral and lowered its price target to $26 a share from $39 a share. Atlantic’s new price target represents a 6.6 percent premium to the stock’s closing price of $24.39 on Thursday. Analyst Hamilton Faber noted that increased competition in the streaming space, combined with the growth of AI-based music, could be the perfect storm to weigh on the stock. “WMG and other music labels insist they should pay for any AI-created tracks derived from their artists’ work, but the main defense appears to be regulation, which could take years to pass into law,” Faber said. “While WMG has lost weight this year, we don’t think the AI debate is settled yet.” Faber said there could be some optimism about a deal with TikTok, which licenses music from Warner-owned artists on the social media platform. That could cushion some of the blow to the stock, and Spotify could boost its price. “All in all, it’s clear that the revenue growth that we originally envisioned for the label didn’t work out as expected,” Faber said. “Certainly, there’s an opportunity to make up for that with deals with social, gaming and fitness platforms, which the company refers to as emerging streaming.” Warner Music’s shares have plunged more than 30 percent since the start of the year. WMG YTD Mountain Warner Music Group shares have fallen more than 30% this year. — CNBC’s Michael Bloom contributed to this report.