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JPMorgan leaves bullish target unchanged on Apple shares citing AI upgrades

EditorEmilio Ghigini
Published 06/11/2024, 06:12 AM
© Reuters.

On Tuesday, JPMorgan reiterated its Overweight rating on Apple with a steady price target of $225.00 for the shares. The firm's stance comes after Apple's recent Worldwide Developers Conference (WWDC), where the tech giant unveiled a series of enhancements to its native and third-party app features, leveraging Apple Intelligence. These updates are expected to drive the hardware upgrade cycle, coinciding with the anticipated launch of the iPhone 16 and the release of iOS 18 in the fall.

The analyst pointed out that despite a lack of "killer apps" causing the stock to take a "breather" after its rally leading up to the event, historical consumer survey data suggests that the accumulation of feature upgrades across various applications provides compelling reasons for users to upgrade. The estimated 1.4 billion installed base of Apple devices is seen as a potential market for these upgrades over the next few years.

A significant highlight from WWDC was the introduction of AI features across Apple's ecosystem, including Macs, iPads, and iPhones. These advancements will be particularly influential for iPhone users, with iOS 18 updates being compatible exclusively with iPhone 15 Pro models and newer.

This selective availability is expected to not only offer backward compatibility but also to accelerate the AI-driven upgrade cycle, especially in emerging markets where Apple focuses on marketing more affordable, previous-generation iPhones.

The analyst anticipates that features like Siri's enhanced control over native apps and integration with ChatGPT, which supports functionalities such as call recording, transcriptions, and smart sorting of photos and videos, will pique consumer interest. These capabilities are seen as key differentiators that will attract users to the new iPhone models.

Looking ahead, JPMorgan forecasts the beginning of a device upgrade cycle for iPhones starting this fall, which is projected to peak with the launch of the iPhone 17 in 2025. This upgrade cycle is expected to significantly impact Apple's financial year 2025 and 2026 volumes, reinforcing the firm's positive outlook on the tech giant's stock.

In other recent news, Apple Inc (NASDAQ:AAPL). continues to make significant strides in artificial intelligence (AI) and product developments. BofA Securities maintains confidence in Apple, highlighting the company's advancements in AI showcased at the Worldwide Developers Conference (WWDC). The firm anticipates that future iPhone models will be AI-capable, supporting its optimistic outlook for Apple's stock performance.

Apple also introduced iOS 18 and iPadOS 18, featuring new customization options and enhanced intelligence features, including the debut of Apple Intelligence, a personal intelligence system. The company also announced a shift to using its own server chips for AI processing, expected to enhance AI experiences across its devices.

However, the company faced criticism from Elon Musk, CEO of Tesla (NASDAQ:TSLA), who threatened to ban Apple devices at his companies if Apple proceeds with the integration of OpenAI into its operating system.

Despite this, Apple continues to leverage AI to rejuvenate iPhone sales, targeting its substantial user base of over 1 billion customers. Analysts from D.A. Davidson and Wedbush Securities see this as an opportunity, predicting a significant iPhone upgrade cycle.

These developments underscore Apple's commitment to innovation and user experience, even as it navigates a complex and rapidly evolving tech landscape.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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