20 years ago, Apple (NASDAQ:AAPL) changed the way people consume music with the introduction of the iPod. A few years later it changed the communication landscape with the iPhone.
Now, according to Loop Capital analyst Ananda Baruah, Apple has the opportunity to solidify its position as the preferred ‘base camp’ for consumers in the emerging field of generative AI.
“Each of those trends were material stock catalysts and the basic math suggests that Gen AI has the opportunity to be the same,” the 5-star analyst went on to say.
Baruah’s bullish take is based on the findings of Loop Capital supply chain analyst John Donovan, who sees “material iPhone build and demand increases,” which potentially could last through CY2026. Some of Donovan’s previous findings were behind a downgrade for Apple in May last year, based on weakening iPhone demand. Yet, times are different now and this upgrade is part of a “material narrative change.”
The key driver behind the shift in tone is the Gen AI opportunity, but the potential for an “accentuated refresh cycle from amplified Covid demand” and a new iPhone platform in 2025 (the iPhone 17), also play their part.
But there’s more to it. iPhone ASPs keep on rising but the Street’s figures remain low, while Apple’s key businesses will benefit too. For instance, the Services & Accessories segments are due to “both larger Installed Base AND new Gen AI services.” And with Apple being the “premium Gen AI content creation & consumption point,” that should be a boon for the Mac and iPad. Then there’s also the Vision AR/VR, which speaks for itself.
Lastly, a big differentiator for Apple vs. Samsung & Android is its closed ecosystem. “Simply,” says Baruah, “closed ecosystems make a big difference in tech adoption dynamics (see NVDA today & AAPL 20 years ago in digital content) and AAPL currently ‘owns’ the innovation stack (software & hardware & silicon).”
With that in mind, Baruah has now upgraded his rating for AAPL from Hold (i.e., Neutral) to Buy, while his price target is also raised from $170 to a Street-high of $300. What does this mean for investors? Upside of 28% from current levels. (To watch Baruah’s track record, click here)
Elsewhere on the Street, AAPL stock receives an additional 24 Buys, 9 Holds and 1 Sell, all culminating in a Moderate Buy consensus rating. However, the average target currently stands at $230.25, implying the shares have not much room left to run right now. (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.
