Analysts still generally believe in Apple (NASDAQ:AAPL) stock despite the feeling in the tech industry that the company is late to the artificial intelligence party.
However, of the 47 analysts covering its stock, 31 still rate it a Buy, with a $216 target price. While that’s only a few dollars higher than where it’s currently trading, the glass-half-full person will think this is better than a few dollars below where it’s trading. I fit into that camp.
Analysts tend to be the last people to buy into a new corporate strategy, so it’s not worrisome that the target isn’t higher. It will move higher as analysts see it deliver more AI news.
In June, I argued that Apple Intelligence could reignite iPhone sales, not to mention pushing Apple stock higher. It’s ridiculous to think a company the size of Apple, run by an excellent CEO, would be late to anything.
Tim Cook will figure out how best to leverage AI to benefit the company and its customers. Investors will just have to be patient. Here’s why.
Oppenheimer Analyst Stands Behind Apple Stock
On June 28, Oppenheimer analyst Martin Yang gave Apple stock a boost, reiterating his Outperform rating, but more importantly, raising his price target by 25% to $250.
“We believe that Apple’s introduction of Apple Intelligence will position the company as the leader in the consumer AI experience,” Investor’s Business Daily reported Yang’s comments to Oppenheimer clients.
Apple’s ecosystem, incorporating proprietary hardware and software, has always been focused on protecting its users’ data. It will continue to do so, setting Apple Intelligence apart from other AI platforms.
“We expect Apple Intelligence to produce even stronger synergies between different Apple hardware products. Better hardware synergy enables Apple to create a wider and deeper moat once a user enters the ecosystem through iPhone, Mac, iPad, or Apple TV,” Wang wrote.
As I suggested in June, the combination of Apple Intelligence launching with a shift by investors from some other Magnificent Seven stocks to Apple. That’s good news leading up to the launch of iOS 18 in mid-to-late September.
Apple Intelligence Should Drive iPhone Sales
If your iPad, or Mac has an M1 chip, you will be able to take advantage of Apple Intelligence. The first M1 chip was launched in November 2020. The company’s since brought out other versions such as the M1 Pro, M1 Max and M1 Ultra.
As for the iPhone, only the 15 Pro Max and 15 Pro will support Apple Intelligence, which tells me your iPhone will have to have an A17 Pro chip. Both the iPhone 15 and iPhone 15 Plus, which have an A16 Bionic chip, won’t make the cut.
This means the iPhone upgrade cycle has just been accelerated exponnenntially.
JPMorgan analyst Samik Chatterjee said as much in mid-June. He has an “Overweight” rating on Apple stock with a $245 target price, 16% higher than its current share price. The analyst believes the upgrade cycle starts in the fall with the launch of the iPhone 16 series, peaking next year with the iPhone 17.
“Chatterjee predicted Apple will sell 244 million iPhone units in fiscal 2025, up 10% from expected sales of 222 million units this year. He sees iPhone sales reaching 268 million in fiscal 2026,” Investor’s Business Daily contributor Patrick Seitz wrote in June.
AI will also have a positive effect on its Services revenue as Apple monetizes third-party AI apps in the years ahead.
So, at least for the next couple of years, iPhone sales will be in growth mode, which should be a major catalyst for Apple stock.
On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
