Despite fears around weak iPhone sales, Apple (NASDAQ:AAPL) investors breathed a sigh of relief last week after the tech giant delivered its fiscal second-quarter report.
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The results, while certainly no blowout, came in better-than-expected, with Apple even offering a sweetener in the shape of a new $110 billion share buyback program.
With that tricky print now in the rear view, looking ahead, Wedbush analyst Daniel Ives thinks that growth will soon be on the menu again.
“We expect China iPhone unit growth will slowly turn from a headwind to a tailwind for Apple as Cook & Co. head into a much anticipated AI driven iPhone 16 supercycle starting in September,” Ives said.
In what should represent the start of a “new frontier of growth,” Ives expects that generative AI will be a major theme of the iPhone 16. The “aggressive and no holds barred” strategy will focus on AI and should allow Apple to maximize its revenue potential through both its Services segment and by “catalyzing upgrades” with the iPhone 16 set to be the first iPhone model boasting exclusive AI features. Moreover, a dedicated AI App Store will serve as the cornerstone platform for developers and users “tapping into AI.” An initial glimpse of what’s coming should be unveiled at WWDC in June.
For Ives, it’s all about making it through the current June quarter, a period that should mark the end of the “growth doldrums” with growth set to resume once the September quarter and FY25 head into view. “In a nutshell,” Ives summed up, “we believe the worst is in the rearview mirror for Apple and now there is a massive iPhone product cycle with pent-up demand and AI now coming to Cupertino looking out over the next 6-9 months along with a $110 billion newly announced buyback in Apple’s back pocket.”
To this end, Ives rates Apple shares as an Outperform (i.e., Buy), alongside a $250 price target. The implication for investors? Upside of ~37% from current levels. (To watch Ives’ track record, click here)
So, that the Wedbush view, but what does the rest of the Street have in mind for Apple? Based on a mix of 19 Buys, 12 Holds and 1 Sell, the stock receives a Moderate Buy consensus rating. The forecast calls for one-year returns of ~12%, considering the average price target currently stands at $204.39. (See Apple stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
