Apple Inc (NASDAQ:AAPL) shares are hitting new all-time highs on Tuesday after the stock was upgraded by DA Davidson following a series of announcements out of the company's Worldwide Developers Conference 2024.
What To Know: DA Davidson analyst Gil Luria upgraded Apple from Neutral to Buy and raised the price target from $200 to $230 on Tuesday. The analyst believes the AI-related announcements out of WWDC on Monday will drive an iPhone upgrade cycle.
"We believe the integration of summarization, enhanced search, multi-modality, text generation, and enhanced photo editing into the existing ecosystem will drive much broader adoption of AI than we have seen to date," Luria said in a new note to clients.
The analyst compared Apple's AI announcements to the introduction of iTunes. Digital music was initially accessed through standalone platforms like Napster before Apple integrated digital music into existing consumer applications via iTunes. That ended up being the way a lot of people transitioned to digital music, Luria said.
The analyst believes Apple has gained the trust of the consumer, which will allow it to deliver deeply integrated AI functionality in a way that standalone chat applications, PCs and Android devices "may not be able to fully replicate."
The newly introduced AI functionality will only be compatible with iPhone 15 Pro models and beyond, which creates a favorable scenario for Apple that could spark an earlier-than-expected upgrade cycle, the analyst said, adding that the last time Apple stock outperformed was the iPhone 12 cycle, which similarly introduced 5G capabilities and limited backward compatibility.
DA Davidson raised its fiscal-year 2025 estimates "comfortably above consensus" on expectations for a strong iPhone upgrade cycle this year.
Several other analysts weighed in on Apple following the announcements out of WWDC on Monday:
Needham analyst Laura Martin reiterated Apple with a Buy and maintained a price target of $220.
JPMorgan analyst Samik Chatterjee reiterated Apple with an Overweight and maintained a price target of $225.
Rosenblatt analyst Barton Crockett reiterated Apple with a Neutral and maintained a price target of $196.
Morgan Stanley analyst Erik Woodring maintained Apple with an Overweight and maintained a price target of $216.
UBS analyst David Vogt maintained Apple with a Neutral and maintained a price target of $190.
Barclays analyst Tim Long reiterated Apple with an Underweight and maintained a price target of $164.