Apple's AI 'Upgrade Cycle To Be Driven By iPhone 17': Analyst Outlines 3 Reasons Why

Apple Inc AAPL remains at the forefront of shaping the future of consumer electronics. Amid shifting market dynamics and emerging trends, the spotlight now shines on Apple’s forthcoming AI upgrade cycle—a pivotal moment that promises to redefine the smartphone landscape.

As investors brace for the next wave of technological advancement, the stage is set for Apple to chart a course towards sustained growth and value creation.

The Apple Analyst

JPMorgan Analyst Samik Chatterjee has sparked excitement among Apple stock investors. Chatterjee has a bullish outlook on the stock, rating it Overweight and setting a price target of $210.

While Chatterjee moderates the December 2024 price target from $215.00 to $210.00, the rationale remains robust. Based on a P/E multiple of approximately 29x on 2025 earnings estimates, the target reflects a more reasonable 25x multiple on fiscal year 2026 (FY26) earnings estimates.

Also Read: Apple To $210? Here Are 10 Top Analyst Forecasts For Thursday

The Apple Thesis

Chatterjee’s optimism stems from the convergence of two key factors: the impending AI-led iPhone upgrade cycle and the resilience of Apple’s Services revenues. This combination presents a compelling case for long-term growth, often overlooked by investors.

Apple Is Ripe For Re-Rating: A Shift in Sentiment

Despite near-term challenges, sentiment surrounding Apple is improving, particularly among hedge fund investors. Chatterjee cites reasons why Apple is attracting attention currently:

• Valuation Reset: With shares experiencing a modest decline year-to-date, trading at 25x NTM Consensus EPS, now may be an opportune moment for investors to consider entry.
• AI On the Horizon: The excitement surrounding the imminent AI-led iPhone upgrade cycle builds on the momentum of the 5G era, presenting a compelling opportunity for investors eyeing future technological advancements.

Timing the Upgrade: According to Chatterjee, historical trends suggest that the re-rating typically precedes the actual product launch. Investors are positioning themselves for the AI revolution. With regard to Apple’s AI upgrade timelines, Chatterjee said, “we expect the upgrade cycle to be driven by iPhone 17.”

“Expect broader adoption of AI phones for the smartphone industry next year in 2025,” he added.

Potential Revenue Surge: Chatterjee’s projections paint a promising picture for Apple’s future. With the AI upgrade cycle in sight, estimates for iPhone sales in 2026 have been revised upwards. This hints at a potential revenue and earnings surge in FY26.

Seizing Opportunities: While challenges persist, Apple’s foray into the AI realm promises exciting opportunities for investors. With strategic positioning and a keen eye on the future, now may be the perfect time to consider Apple shares as a cornerstone of a diversified investment portfolio.

AAPL Price Action: Apple stock was up 0.8% to $169.12 at the time of publication Thursday.

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