Apple To Gain Market Share With AI Smartphone, Says Bullish Analyst: 'Skate To Where The AI Puck Is Going'

Technology giant Apple Inc AAPL is being upgraded by a Street analyst Wednesday on the heels of its artificial intelligence initiatives shown off at the company's Worldwide Developers Conference earlier this month.

The Apple Analyst: Rosenblatt analyst Barton Crockett upgraded shares of Apple from Neutral to Buy and raised the price target from $196 to $260.

Related Link: 7 Apple Analysts Mixed On WWDC 2024: iPhone Upgrade Cycle Coming, But When?

The Apple Takeaways: Apple could see a market share lift after unveiling its Apple Intelligence software with a focus on privacy, Crockett said in a new investor note.

The privacy focus of Apple Intelligence is unmatched by Android, which is owned by Alphabet Inc GOOG GOOGL, the analyst said.

"Strong privacy is by far the top feature consumers want in AI, based on our recent US survey," he said.

The privacy concerns could tip the AI risk-reward in Apple's favor, Crockett said.

A survey of over 500 consumers saw 17.8% list strong privacy as the top feature they wanted in an AI smartphone, according to Rosenblatt. Insight — questions answered by AI — ranked second at 12.2%.

"Apple appears positioned to gain brand interest and AI market share from its out-of-the-gate focus on strong privacy."

Apple's focus on specialized large language models and Apple silicon processors could help the company with cost pressures and standing out from competitors, the analyst said.

"So Apple can have its cake (healthy margins) and eat it too."

Consumers do not currently expect to accelerate their purchases of AI smartphones, but that could change with new features, he said.

“The puck is moving towards greater AI interest, we believe. We’d rather step up with a Wayne Gretzky-esque skate to where the AI puck is going, than stand in place and watch the AI puck pass us by.”

The analyst compared the launch of AI smartphones from Apple to the iPhone 12, which brought a 39% pop in iPhone sales in 2021, possibly due to the transition to 5G devices.

"In a new era of AI optionality, with Apple exhibiting cost-disciplined leadership, we believe Apple can sustain a valuation premium, and that the shares can rise with an iPhone AI cycle earnings lift."  

AAPL Price Action: Apple shares are up 1.36% to $211.91 on Wednesday versus a 52-week trading range of $164.08 to $220.20. Apple stock is up 13% over the last year.

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Photo courtesy of Apple.