On Tuesday, Bernstein SocGen Group maintained its Outperform rating on Apple Inc. (NASDAQ:AAPL), with a consistent price target of $240.00.
The firm's commentary highlighted several factors influencing their outlook. Firstly, there is speculation about potential price increases for iPhone Pro models, though Apple may opt to keep base prices stable and charge more for upgraded configurations.
Despite the possibility of customers choosing less expensive models due to the expanded availability of Apple Intelligence across the iPhone 16 range, the overall iPhone 16 and 17 cycles are expected to be robust. This is attributed to new AI functionalities and longer replacement cycles observed in recent years.
The analyst anticipates a 13% year-over-year growth in iPhone revenue, which is more optimistic than the general consensus of 8%. This growth expectation is factored into the belief that the iPhone 16's performance might be satisfactory, with a stronger showing for the iPhone 17 already considered by investors.
The report also suggests that Apple is likely to demonstrate more advanced AI capabilities, with initial features becoming available in October with iOS 18.1, and further rollouts over the following six months. A more detailed timeline for the release of various AI functions and their availability in different languages and regions is also expected.
Regarding product availability, the analyst expects no delays, with full availability anticipated for Apple products. It is noted that the September quarter results do not necessarily reflect the strength of iPhone cycles, as they are more influenced by channel inventory buildup for new products.
Finally, the report touches on Apple's valuation, which is at the higher end of its historical range. The stock typically experiences a pause following new iPhone announcements, suggesting that the risk-reward balance for investors is becoming more even.
In other recent news, Apple Inc. has initiated several strategic moves in the global market. The tech giant has partnered with Bharti Airtel, India's second-largest telecom operator, to expand its services in India, offering free access to Apple Music and Apple TV+ streaming services to a significant number of Airtel's 281 million customers. This is expected to boost Apple's service revenue and user base in the region.
Simultaneously, Apple is in discussions to invest in OpenAI, potentially valuing the AI firm at over $100 billion. OpenAI's ChatGPT has been integrated into Apple devices under the initiative "Apple Intelligence", which emphasizes Apple's focus on artificial intelligence.
In the financial sector, Tigress Financial Partners has maintained a Strong Buy rating on Apple and increased their price target in anticipation of the forthcoming launch of the AI-powered iPhone 16. Apple's Q3 2024 revenue showed a 5% year-over-year increase, reaching $85.8 billion, with services revenue surging by 14% to a record $24.2 billion.
Meanwhile, the U.S. has initiated trade dispute consultations with Canada over a new digital services tax, which the Biden administration views as potentially discriminatory towards American tech companies, including Apple.
Lastly, Berkshire Hathaway (NYSE:BRKa), a significant Apple investor, has reached a financial milestone, surpassing a market value of $1 trillion.
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