Apple Inc. (AAPL) witnessed a surge in its Apple shares stock value during Thursday’s trading session, bouncing back from earlier weekly losses. This uptick came on the heels of an optimistic assessment by Bank of America analysts, who revised their target price for Apple’s shares. The analysts highlighted the potential growth prospects for Apple, primarily driven by advancements in artificial intelligence (AI) technologies.
Upgraded Rating and Increased Price Target by Bank of America
In a significant move, Bank of America shifted its stance on Apple shares, upgrading it from ‘neutral’ to ‘buy.’ Alongside this upgrade, the firm also increased its price target for Apple from $208 to $225.
As a result, Apple’s shares witnessed a substantial increase, rising 3.4% to $188.92 around 2:30 p.m. ET on Thursday.
AI as a Catalyst for iPhone Upgrades
Bank of America’s analysts project a robust, multi-year cycle of iPhone upgrades, spurred by the growing demand for state-of-the-art hardware capable of supporting Generative AI features expected to debut in 2024/2025.
They anticipate that Apple will roll out AI-centric features in its iOS18, with a focus on enhancing iPhone hardware capabilities and offering AI-powered third-party applications.
Vision Pro: A New Revenue Avenue
The introduction of Vision Pro, scheduled for a February 2 release, is seen as a potential game-changer. Analysts believe that Vision Pro’s revenues could eventually eclipse those of the iPad. This expectation is based on the unique applications and user experiences enabled by spatial computing, which could significantly boost Apple’s services sector.
Addressing Investor Concerns
Despite the positive outlook, Bank of America’s analysts acknowledged several investor concerns, including fluctuating iPhone sales in China, potential bans on Apple Watch in the U.S., and ongoing legal disputes. However, they believe these challenges are not substantial enough to overshadow the long-term growth potential AI brings.
The analysis suggests that the perceived weaknesses in the Chinese market are being compensated by strengths in other regions. Additionally, the legal risks are deemed manageable. Internal checks by Bank of America indicate a possible increase in iPhone production in December, followed by a potential decrease in March, though these changes are not expected to significantly impact overall orders.
