Apple Stock Hits All-Time High on AI Phone Anticipation and New Buy Ratings: What Investors Should Know

Analysts Notebook joined discussion · Jul 16, 2024 19:37

On Monday, $Apple (AAPL.US)$ shares surged to a record high after analysts from Loop Capital and Morgan Stanley raised their price targets, citing the company's strong position in AI. Loop Capital upgraded Apple stock to "buy" and increased their price target to $300, highlighting the potential impact of generative AI with new iPhones.

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Apple Stock Hits All-Time High on AI Phone Anticipation and New Buy Ratings: What Investors Should Know

Morgan Stanley's 'Top Pick'

Morgan Stanley analyst Erik Woodring believes that investors are underestimating the impact of Apple's new AI launch, which he sees as a catalyst for a multiyear product upgrade cycle. He raised his price target for Apple by $57 to $273 per share and predicts the company could ship nearly 500 million iPhones over the next two years. The upgrade cycle will drive 5% annual growth in iPhone average selling prices.

Source: Morgan Stanley Research

Apple Intelligence is a clear catalyst to boost iPhone and iPad shipments," Morgan Stanley analysts said.

Woodring forecasts $485 billion in total revenue and $8.70 in earnings per share by fiscal 2026, making Apple a "Top Pick" among tech stocks for Morgan Stanley. He also highlights near-term positive catalysts such as fiscal-third-quarter earnings, the mid-September iPhone launch, and potential iPhone build revisions in mid-October, suggesting that accelerating unit growth will sustain Apple's stock outperformance.

What Other Analysts Said

• Loop analysts compared Apple's new AI-powered iPhones and iPads to the transformative impact of the first iPods and iPhones, which made Apple a leader in music and social media, respectively. They believe these new devices could establish Apple as the central hub for generative AI as their AI services become more advanced.

The rise of digital content and social media were material stock catalysts that helped Apple's stock rise substantially over time," Loop analysts said, "generative AI could be a similar driving force."

• Wedbush analyst Dan Ives considers the June quarter a prelude to major events in September. He expects initial iPhone 16 shipments to be around 90 million, exceeding earlier Wall Street expectations of 80-84 million, indicating double-digit growth year-over-year.

We believe optimism is growing throughout the Asia supply chain that this iPhone 16 AI-driven upgrade could represent a golden upgrade cycle for Cupertino looking ahead with pent-up demand building globally," he added.

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Source: REUTERS, Investor's Business Daily, MarketWatch, TheStreet, Morgan Stanley, Bloomberg, Investopedia

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