On Monday, Evercore ISI maintained a positive stance on Apple Inc. (NASDAQ:AAPL), reiterating an Outperform rating and a price target of $250.00. The firm addressed the recent bearish sentiment surrounding Apple, suggesting that the market's lower expectations could lead to favorable outcomes for the tech giant's stock performance. They anticipate that Apple will meet current consensus estimates, which should help the stock to rise.
Despite concerns centered on the Chinese smartphone market, Evercore ISI believes that the perceived risks are exaggerated. They argue that potential growth in developing markets and a robust upgrade cycle in the U.S., spurred by advancements in AI, could mitigate these risks. Furthermore, challenges faced by Huawei, mainly in securing chip supplies and competing with the lower-end iPhone models, could lessen the threat to Apple in China. Additionally, expected government stimulus is predicted to boost the overall smartphone market in China, which would benefit all market participants.
The firm also highlighted the potential for a prolonged iPhone upgrade cycle, driven by the staggered release of AI features and strong consumer word-of-mouth. This could lead to sustained demand for Apple's products. Beyond the iPhone, optimism was expressed for the Wearables and Services segments, anticipating revenue growth from new product launches such as the Apple Watch, Watch Ultra, AirPods 4, and USB-C AirPods Max.
Evercore ISI noted that gross margins will play a crucial role in Apple's financial performance. They could see benefits from a higher iPhone product mix in the December quarter, although this might be balanced out by a comparatively lower mix of Services revenue. In conclusion, the firm believes that Apple is well-positioned to exceed the modest expectations set for the September quarter and offers a positive outlook for the December quarter guidance.
In other recent news, Taiwan Semiconductor Manufacturing Co (TSMC) announced a 40% surge in its third-quarter net profit, attributing this success to the increased demand for advanced chips used in artificial intelligence applications. The company's net profit forecast for the quarter ending September 30 was T$298.2 billion ($9.27 billion), surpassing the T$211 billion recorded in the same quarter the previous year.
This projection was based on a LSEG SmartEstimate, which incorporated predictions from 22 analysts. Moreover, TSMC has committed to investing $65 billion in three new manufacturing plants in Arizona, USA, as part of its strategy to enhance its manufacturing capabilities.
In relation to Apple Inc., Evercore ISI maintained a positive outlook on the company's stock, highlighting stable demand for the iPhone 16 and 16 Pro models. Conversely, Piper Sandler held a neutral stance on Apple's stock, following a comprehensive teen survey that indicated a slight decrease in the intention to upgrade to the new iPhone 16. Meanwhile, Citi raised its price target for Apple, maintaining a buy rating ahead of earnings.
Amazon (NASDAQ:AMZN) announced the integration of Apple TV+ into its Prime Video service in the United States, marking a significant collaboration between the two tech giants. This partnership will allow Prime Video subscribers to access Apple TV+ content for a monthly fee of $9.99, enhancing the range of entertainment options available to them.
InvestingPro Insights
To complement Evercore ISI's optimistic outlook on Apple Inc. (NASDAQ:AAPL), recent data from InvestingPro provides additional context for investors. Apple's market capitalization stands at an impressive $3.46 trillion, underlining its position as a dominant player in the tech industry. This aligns with the InvestingPro Tip highlighting Apple as a "prominent player in the Technology Hardware, Storage & Peripherals industry."
The company's financial health appears robust, with a revenue of $385.6 billion over the last twelve months as of Q3 2024, and an adjusted operating income of $120.59 billion for the same period. These figures support Evercore ISI's confidence in Apple's ability to meet consensus estimates.
An InvestingPro Tip notes that Apple "has raised its dividend for 12 consecutive years," which may appeal to income-focused investors. However, with a current dividend yield of 0.44%, investors should note that Apple's strength lies more in growth potential than immediate income.
It's worth mentioning that Apple is trading at a P/E ratio of 34.65, which the InvestingPro Tips describe as "trading at a high earnings multiple." This valuation suggests that the market has high expectations for Apple's future performance, aligning with Evercore ISI's positive outlook on the company's potential to exceed modest expectations.
For investors seeking a more comprehensive analysis, InvestingPro offers 16 additional tips for Apple, providing a deeper understanding of the company's financial position and market standing.
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