- Apple stock Rises, Analysts at Bank of America raised their rating, citing the possibility of significant long-term profits for the tech giant as artificial intelligence (AI) technology is incorporated into the iPhone.
- According to the experts, investors’ concerns over short-term issues such as China’s poor sales, the U.S. ban on Apple Watches, and legal disputes fail to take into account the long-term potential benefits of the iPhone industry in the context of the AI growth.
- Thursday’s intraday trade saw Apple shares rise more than 3%, recovering from earlier in the week’s losses.
Apple (AAPL) shares experienced a notable surge in intraday trading on Thursday, recovering from earlier losses in the week. This upward momentum followed Bank of America’s decision to upgrade Apple from neutral to buy, coupled with an increase in their price target from $208 to $225.
As of 2:30 p.m. ET on Thursday, Apple shares had risen by 3.4%, reaching $188.92. Bank of America analysts foresee a robust multi-year iPhone upgrade cycle, attributing it to the demand for cutting-edge hardware necessary for the introduction of Generative AI features expected in 2024/2025.
Anticipating Apple’s foray into AI, the analysts at Bank of America predict the integration of AI-driven features in iOS18. They believe that monetization opportunities will arise through enhanced iPhone hardware and third-party apps utilizing AI capabilities.
Highlighting the upcoming launch of Vision Pro on February 2, Bank of America suggests that this new technology could surpass iPad revenues over time. The analysts emphasize the potential of spatial computing, leading to unique use cases that drive services upward.
Addressing investor concerns, particularly those related to iPhone sales in China, an Apple Watch ban in the U.S., and ongoing legal challenges, Bank of America contends that these issues may be overshadowing the long-term growth potential associated with AI. They reassure that weaknesses in China are balanced by strengths in other countries, and the perceived risks from legal matters are manageable. Additionally, Bank of America’s checks indicate higher iPhone production in December and potentially lower in March, but with no significant aggregate material order changes.
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