Apple hits record again after being named Morgan Stanley’s top pick

(Bloomberg) — Apple Inc. hit another record high on Monday after the tech giant was named one of Morgan Stanley’s Top Picks, with the brokerage seeing the launch of the company’s artificial intelligence platform triggering a record run among users to update their smartphones. , tablets and computers.

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Analyst Erik Woodring raised his price target on the tech giant’s shares to $273, the third highest among analysts tracked by Bloomberg, saying Apple Intelligence has the potential to drive a record number of device upgrades. The feature is a “clear catalyst” for a multi-year upgrade cycle, he wrote in a note on Monday.

The highest price target for Apple shares comes from Loop Capital, which on Monday upgraded the stock to buy and raised its objective from $170 to $300. Apple is in position to become the “field basis” of generative AI preferred by consumers, “just as it did with digital content (iPod) and social media (iPhone)”, wrote analyst Ananda Baruah in a note.

Morgan Stanley’s Woodring predicts Apple will ship nearly 500 million iPhones over the next two years — higher than the record 2021-2022 cycle.

Apple unveiled its suite of AI services in June at the Worldwide Developers Conference, with senior vice president Craig Federighi describing it as “AI for the rest of us.” The stock hit its first record of the year following the revelation.

Apple shares rose as much as 2.9% to $237.23. As of Friday’s close, shares have risen 17% since the company unveiled Apple Intelligence, outperforming the Nasdaq 100 index’s 7% gain over the same period.

“We believe there is a record level of pent-up demand heading into the iPhone 16 cycle later this year,” wrote Woodring, who has an overweight rating on the stock. “Coming out of WWDC – where Apple debuted Apple Intelligence – we have even greater conviction that FY25 can be the start of a multi-year device refresh cycle.”

Apple Intelligence “will provide greatly enhanced and unique utility value to the Apple ecosystem” for more than 1.3 billion users, Woodring said, adding that it will force device upgrades and accelerate product replacement cycles – a key catalyst which has historically driven Apple stock’s outperformance.

Only 15% of Apple’s total installed user base will be able to support Apple Intelligence because the technology will be limited to devices using A17 Pro and M-Series chips, Woodring said. While most Mac users will be able to use it, only 8% of current iPhone and iPad users will be able to power the AI ​​platform. According to analyst estimates, more than 1.2 billion iPhones, iPads and Macs will need to be updated.

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Initial adoption of Apple Intelligence will be limited to English iPhone users in the US when it launches this fall. Still, Woodring sees factors like expanded functionality in non-English languages ​​providing even more value to users over the next 12 to 24 months. In Woodring’s view, this sets Apple up for a return to year-over-year unit growth in fiscal 2025, followed by the potential for a big cycle in fiscal 2026.

Apple’s annual sales in India have reached a record of nearly $8 billion, Bloomberg News reported on Monday, highlighting a fast-growing market where the iPhone maker now assembles more of its devices and operates two stores of its own.

–With assistance from Ryan Vlastelica.

(Updates stocks and chart. Also adds additional details about Loop Capital update in third paragraph.)

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