Bank of America reiterated Apple (NASDAQ:AAPL) as a top pick, maintaining a "Buy" rating and a price target of $230 on the stock in a note Wednesday.
BofA highlights the forthcoming shift from smartphones to "IntelliPhones," which they believe will drive a significant multi-year upgrade cycle. BofA analysts are optimistic about the adoption of AI-enabled IntelliPhones, predicting it will surpass the rapid uptake seen with smartphones and 5G.
With a vast installed base of over four billion smartphones, they anticipate this upgrade cycle to be a once-in-a-decade event.
"We view the upcoming AI-enabled phones (IntelliPhones) to drive a multi-year upgrade cycle similar to the step function improvement driven by the introduction of smartphones," the note stated.
IntelliPhones are expected to leverage advanced AI and machine learning to offer features such as superior personal assistance, language processing, health monitoring, enhanced photography, and AR/VR experiences.
BofA notes, "Context awareness will be the key differentiator," allowing for more sophisticated and personalized user functions.
Furthermore, the bank says IntelliPhones will dominate edge AI, benefiting from their portability, ubiquity, and integrated sensors. This evolution is poised to transform various sectors, with AI agents mimicking roles like travel agents and health experts, creating new monetization opportunities.
BofA concludes that the AI-enabled IntelliPhone revolution will significantly widen the gap between traditional smartphones and these advanced devices, driving consumer desire for upgrades.