Zinger Key Points
- Analysts size up Apple stock after the WWDC keynote.
- Analysts are mixed on if there are enough new features to get Apple users to upgrade their iPhones and other devices.
Technology giant Apple Inc AAPL kicked off its Worldwide Developers Conference (WWDC) Monday, highlighting new features for iPads and iPhones and a deeper push to integrate artificial intelligence on products.
Here's what analysts are saying after the event.
The Apple Analysts:
- Needham analyst Laura Martin has a Buy rating and $220 price target.
- JPMorgan analyst Samik Chatterjee has an Overweight rating and $225 price target.
- RBC Capital analyst Brad Erickson has an Outperform rating and $200 price target.
- Rosenblatt analyst Barton Crockett has a Neutral rating and $196 price target.
- Citi analyst Atif Malik has a Buy rating and $210 price target.
- KeyBanc analyst Brandon Nispel has a Sector Weight rating and no price target.
- Bank of America analyst Wamsi Mohan has a Buy rating and $230 price target.
Related Link: Wedbush Analyst Dan Ives Says Apple’s WWDC 2024 Keynote Lived Up To Its Hype: ‘I Think It Was A Home Run’
Needham on Apple: The WWDC Keynote was disappointing, according to Martin.
"There was nothing we heard during the WWDC keynote that makes us believe that consumers will buy iPhones faster than our current projections," Martin said.
The analyst said GenAI was the best hope for Apple's event, "but fizzled." Martin also questioned why Apple waited to talk about GenAI until the end of the event, "which made them appear tone-deaf to Wall Street's concerns."
"Annual product launches are too slow a pace in a GenAI world."
Martin said the biggest surprise from the event was the fact that Apple will outsource a part of the consumer offering to OpenAI.
"This marks the first time ever that Apple has outsourced a key technology to a third party."
JPMorgan on Apple: The WWDC keynote showed "enough enhancements" for iPhone upgrades, Chatterjee said in a new investor note.
"While the shares might be taking a breather today after recent outperformance into the event on the absence of any ‘killer apps', our experience with consumer surveys with prior generations of iPhone launches tell us that hardware upgrade cycle is more driven by a collection of feature upgrades across diverse applications," Chatterjee said.
The analyst said the release of AI features for Mac, iPads and iPhones supports an upgrade cycle across all devices.
"We continue to expect the start of a device upgrade cycle for iPhones later this fall with the upgrade cycle likely peaking with the launch of the iPhone 17 in 2025."
RBC on Apple: The WWDC keynote announcements could be negative for Alphabet Inc GOOG GOOGL, Erickson said.
"Apple confirmed OpenAI's ChatGPT will be Apple's first GenAI partner with ChatGPT integrated into Siri as well as a few of Apple's other productivity apps around content creation," Erickson said.
The analyst said while Google's Gemini could be added in the future, its "moat with Apple's user base" may have gotten smaller. Erickson said Apple could be diversifying away from Alphabet.
Rosenblatt on Apple: The WWDC Keynote showed an emphasis to get over 900 million iPhones to upgrade, Crockett said.
"Apple sells over 200 million iPhones a year, and has an iPhone installed base of over 1 billion devices. But only about 10% of the installed base is the high-end iPhone 15 Pro and Pro Max models that use Apple's A17 Pro chip," Crockett said.
The analyst said Apple Intelligence will significantly enhance Siri’s functionality on the iPhone.
"It (Siri) will move beyond simple question/response, to an ability to understand queries stated imperfectly, and will work with both voice and text input, and be a means for integrating AI capabilities across apps on your iPhone."
Citi on Apple: The 2024 WWDC was the best ever, according to Malik, with increased confidence in the iPhone refresh for 2024 after the event.
"We believe Apple's WWDC was the best WWDC conference in a long time, as it introduced AI for the rest of the people.'" Malik said.
The analyst said the AI features will be available on the iPhone 15 Pro Max/Macs in fall, with iPhone 16 and iPhone 17 models in the future.
"With iPhone demand stabilizing, we maintain our Buy rating post WWDC event."
KeyBanc on Apple: The 2024 WWDC was a "sell-the-news event," Nispel said in a new investor note.
"We believe WWDC is a sell-the-news event where the bulls' view, centered around an ‘iPhone Super Cycle' triggered by Apple Intelligence (AI) being integrated into products, will likely be seen as disappointing," Nispel said.
The analyst said the new software features for iOS, iPad, OS, macOS and visionOS are useful but may not be compelling for the average consumer to buy a new Apple device.
"We believe consumers will hold onto their devices longer to save money given the lack of compelling features."
Bank of America on Apple: The announcement of Apple Intelligence and a partnership with OpenAI were the keys to the WWDC keynote for Mohan.
"The feature set is available on fairly new devices which we feel can lead to an upgrade cycle for AI enabled IntelliPhones as consumers seek to increase their productivity with the new supported features," Mohan said.
The analyst said the OpenAI partnership has questions remaining on the monetization model.
"We expect Apple to get paid for providing access to its large installed base."
AAPL Price Action: Apple shares are up 5% to $202.93 on Tuesday, hitting new 52-week highs.
Photo courtesy of Apple
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