Key Points:
- Raymond James increased Apple’s target from $200 to $250 per share. The firm expects a slight beat in F3Q24 results and a consistent outlook.
- Favorable iPhone and Mac sales trends were observed in the Asia supply chain, TSMC results, and China CAICT data.
- Upcoming AI features are expected to drive a multi-year iPhone upgrade cycle. Significant changes to iPhone 17 internals to enhance on-device AI capabilities.
- Apple’s ecosystem, hardware, and privacy focus offer a unique edge in AI. Early stages of Edge AI require lower capital expenditure and offer faster monetization.
Raymond James analysts have raised their stock price target for Apple Inc. (NASDAQ:AAPL) from $200 to $250 per share, citing the tech giant as “a more stable AI play for volatile times.” The firm, which maintains an Outperform rating on the stock, expressed optimism in its F3Q24 preview, predicting a slight beat in results and an outlook consistent with previous expectations.
This positive outlook is grounded in recent conversations within the Asia supply chain, results from TSMC, and data from China’s CAICT, all indicating favorable near-term trends for iPhone and Mac sales. The analysts stated, “We expect a slight beat and largely in-line outlook,” underscoring Apple’s resilience in the current market.
While the analysts noted that near-term results might not drastically shift the AI narrative, they remain optimistic about the impact of upcoming AI features on driving a multi-year iPhone upgrade cycle. They highlighted recent supply chain conversations that suggest upward revisions in iPhone 16 builds for the latter half of 2024. Furthermore, they pointed out significant changes to the internals of the iPhone 17, indicating Apple’s focus on enhancing on-device AI capabilities.
The analysts explained, “Supply chain data also points to material changes to iPhone 17 internals, suggesting that Apple is looking to do more AI on the device.” Apple’s unique position in offering on-device AI features is attributed to its robust ecosystem, advanced hardware capabilities, and a strong emphasis on privacy. The early stages of Edge AI, which requires lower capital expenditure and offers quicker monetization potential through hardware upgrades, are also highlighted as a strategic advantage for Apple.
Raymond James estimates that each 1% of the installed base upgrading to new phones could contribute $0.20 of incremental EPS. The analysts foresee Apple achieving $8-$8.5 in EPS power for the calendar year 2025. This projection is bolstered by the expected multi-year upgrade cycle driven by new AI features and continued strength in iPhone sales.
Raymond James’ increased Apple stock price target reflects confidence in the company’s stable growth prospects, particularly in AI. The combination of a robust ecosystem, cutting-edge hardware, and a focus on privacy positions Apple uniquely in the market, making it a compelling investment in uncertain times.
