Apple (NASDAQ:AAPL) is in trouble because demand for the latest iPhone has been tepid, with no levers of growth present to alter the situation right now. At least, that’s the core of the bearish argument circulating on Wall Street.
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But not all follow that line of thought. In fact, Wedbush analyst Daniel Ives thinks that heading into December earnings next week (Thursday, January 30), the “panic and bear frenzy around Apple is way overdone.”
While it’s true Ives’ recent checks on Apple iPhone sales in China are “mixed to softer,” he views the overall unit decline in the region as “manageable.” Meanwhile, stronger growth in the U.S. and other international markets should allow Apple to meet Street expectations for the quarter. Additionally, Ives anticipates a strong performance from the Services segment, which he considers crucial to achieving the $4.5 trillion sum-of-the-parts valuation he projects over the next 12 to 18 months.
Ives sees Apple Intelligence as the cornerstone upon which developers will create hundreds of apps, driving billions in “incremental services growth” for the tech giant in the coming years.
“With Apple Intelligence being rolled out in a phased strategy the iPhone 16 upgrade cycle is the start of a massive growth renaissance at Apple and that bull thesis remains intact as we see ~20% of the world’s population ultimately accessing AI through an Apple device over the coming years,” Ives went on to say.
What Ives believes many bears fail to recognize about Apple is its unparalleled installed base of 1.5 billion iPhones and 2.3 billion iOS devices, which he argues will fuel a new AI-driven growth narrative that Wall Street has yet to fully account for. While Ives concedes that the stock is “expensive relative to historical standards,” with 300 million iPhones yet to upgrade over the past four years, the company is only at the beginning of tapping into a “massive, multi-year upgrade cycle.”
“We continue to view Street numbers for 2025 and 2026 as conservative and the sell-off in the stock over the past few weeks we view as a golden opportunity to own the tech stalwart that will usher in the consumer AI Revolution,” Ives opined.
Ives also thinks the bears’ claims on the narrative will turn out to be short-lived as the market fully understands the potential of a China turnaround for Apple. This will become evident once the company announces its AI partner, with Ives thinking Baidu will likely be chosen (though Tencent and ByteDance are also contenders). Ives expects the Apple Intelligence launch in China will take place around April.
Bottom line, Ives rates Apple shares as an Outperform (i.e., Buy), along with a Street-high $325 price target. That figure implies ~45% upside from current levels. (To watch Ives’ track record, click here)
Ives’ bullish take gets the backing of 17 additional Buy recommendations. Combined with 7 Holds and 4 Sells, the consensus view is that AAPL stock is a Moderate Buy. The average price target stands at $242.07, making room for 12-month returns of 8%. (See AAPL 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.
