Apple Inc. AAPL stock could potentially surge by 14% as it emerges as a leader in the artificial intelligence (AI) sector, according to two Wall Street research reports.
What Happened: Although Apple stock had a relatively slow year so far in the Mag 7 club, both CFRA and Bernstein have raised their price targets for Tim Cook-led to $240 per share, citing the company’s advancements in AI, reported Business Insider.
The stock has risen only 11.77% this year, while its other Mag 7 peers, excluding Tesla, have given better returns for investors. The Magnificent Seven stocks include Apple, Microsoft, Google parent Alphabet, Amazon, Nvidia, Meta Platforms and Tesla.
Only Tesla Inc. has performed worse than Apple in 2024 so far, as far as the Mag 7 is concerned.
| Company | Year-to-date return |
| Nvidia | 162.76% |
| Meta Platforms | 42.88% |
| 29.16% | |
| Amazon | 26.11% |
| Microsoft | 21.28% |
| Apple | 11.77% |
| Tesla | -26.33% |
CFRA analyst Angelo Zino predicts that Apple is on the verge of transforming the iPhone into “the ultimate personal assistant” with its “Apple Intelligence” product, showcased at the WWDC last week. Zino believes that Apple’s AI will drive consumer upgrades and support multiple years of growth.
“We expect Apple Intelligence (AI) to help support incremental consumer upgrades, driven by loyalists and an aging installed base, with AI being more evolutionary than cyclical that will aid multiple years of growth,” Zino said.
Bernstein analyst Toni Sacconaghi also foresees significant potential for Apple, especially with its ability to bring AI to its massive installed base of iPhone users. Sacconaghi suggests that Apple could monetize AI features through advertising revenues, higher app store revenues, and commissions on third-party apps.
“Apple can bring AI to the masses, with increasing, everyday utility,” Sacconaghi said.
“Apple is reportedly not paying ChatGPT, highlighting the power that it holds.”
Why It Matters: Apple’s stock has been on a remarkable run, with its recent surge to record highs. This has led to it being identified as one of the most overbought stocks on Wall Street following its foray into consumer-centric AI.
However, CNBC’s Jim Cramer has also advised investors to consider taking profits from their AI stock holdings, suggesting that the market may be overheated.
Not just Bernstein and CFRA, Apple AI endeavors also have Wedbush’s Dan Ives excited. "I think it was a home run. Ultimately, they delivered on every item they needed to in terms of OpenAI, in terms of the privacy, and really essentially what they're doing is they're laying out the stack for developers," Ives said in a post-WWDC analyst note.
Price Action: Apple shares closed 1.04% lower at $207.49 apiece on Friday, according to data from BenzingaPro.
Photo courtesy: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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