In One Chart | Analysts Bullish on Upgrade Cycle - Will Apple Continue Its Rally？

In One Chart joined discussion · Jun 12, 2024 18:59

$Apple (AAPL.US)$shares surged 7% to a record $207.15 per share following the announcement of new AI features at its annual developer conference.The enhancements include an updated Siri, integration with OpenAI's ChatGPT, various writing assistance tools, and customizable emojis, aimed at everyday users. However, these features may require iPhone upgrades.

Let's take a look at Apple's stock performance following past WWDC events:

In One Chart | Analysts Bullish on Upgrade Cycle - Will Apple Continue Its Rally？

Morgan Stanley analysts praised Apple's innovative AI features, predicting they will accelerate iPhone upgrade cycles and contribute to sustained growth. They maintained an "overweight" rating with a $216 price target and a $270 bull case valuation.

Following a WWDC that delivered on the key details we were focused on heading into the event, we have even greater conviction that Apple is on the cusp of a multi-year product refresh that underpins our OW rating, $216 price target, and $270 bull case valuation," the analysts wrote in a note Tuesday.

Bank of America analysts echoed this optimism, highlighting the potential for a multiyear upgrade cycle and increased gross margins. Evercore analysts also expressed confidence, suggesting that the AI features could trigger a significant iPhone upgrade wave, reinforcing their positive outlook on Apple's AI strategy.

Read Here: Apple Debuts AI Innovations at WWDC and Shares Hit Record High

Trading in Apple's call options surged to approximately 2.4 million on Tuesday, quadrupling the average volume seen on any given day in the previous month. The bullish contracts outnumbered their bearish counterparts by a ratio of two-to-one, with the bulk of activity focused on options set to expire on Friday. Furthermore, the premium for short positions in Apple has fallen to its lowest point since late 2021, signaling a significant change in investor sentiment toward the tech giant.