Apple (NASDAQ:AAPL) received a further boost on Wednesday after five-star-rated Rosenblatt analyst Barton Crockett upgraded the stock to a Buy from a Hold, citing that the tech giant could benefit from its AI initiatives. The analyst raised the price target on AAPL to $260 from $196, implying an upside potential of 21.9% from current levels.
Crockett’s Rationale for AAPL Upgrade
Crockett believes that the company’s emphasis on privacy in its AI initiatives, such as Privacy Cloud Compute, may boost its market share. Additionally, Apple’s AI strategy and partnerships, such as with OpenAI, could help it avoid the rising costs faced by hyperscalers while still reaping benefits, according to the analyst. Hyperscalers are large cloud service providers.
As part of its partnership with OpenAI, AAPL is offering ChatGPT for free on its products. Furthermore, AAPL’s Apple Intelligence will be available for free with the new operating systems when they are released later this year. The tech giant unveiled its AI initiative, Apple Intelligence, earlier this year, describing it as “the personal intelligence system for iPhone, iPad, and Mac that combines the power of generative models with personal context to deliver intelligence that’s incredibly useful and relevant.”
BofA Analyst Optimistic About Apple Intelligence
Meanwhile, top-rated Bank of America analyst Wamsi Mohan believes that Apple Intelligence could be a key growth driver for the company’s Services segment. The analyst added that the company’s conversational AI, with its context and privacy features, is crucial for monetizing Apple’s device base through increased productivity, higher-priced apps, and increased subscriptions.
As a result, Mohan expects the company’s services revenue to rise 14% year-over-year to $31.5 billion in FY24. Furthermore, in FY25 and FY26, the analyst expects services revenue of $34.5 billion and $37.3 billion, respectively. In FY23, Apple generated service revenues of $24.86 billion.
The analyst’s price target of $230 implies an upside potential of 7.85% from current levels.
What Is the Price Target for Apple?
Analysts remain cautiously optimistic about AAPL stock, with a Moderate Buy consensus rating based on 24 Buys, 10 Holds, and one Sell. Over the past year, AAPL has increased by more than 10%, and the average AAPL price target of $217.19 implies an upside potential of 1.8% from current levels.
