Apple's (AAPL, Financial) stock momentum has slowed in recent weeks following a rise that brought it close to last month's historic high. However, Evercore analysts suggest that market pessimism towards Apple is overstated.
Leading up to Apple's quarterly earnings report for September, Evercore advises investors to prepare for a potential stock rebound. Analysts believe Apple can surpass lowered market expectations and have rated the stock as "tactically outperform." Amit Daryanani from Evercore highlights concerns in the Chinese smartphone market but believes this risk is offset by growth in developing markets and a robust U.S. upgrade cycle. U.S. market upgrade demand is notably strong, partly driven by advances in artificial intelligence (AI).
Daryanani maintains an "outperform" rating on Apple with a price target of $250. Recently, Apple's stock saw an increase of over 1%, reaching $231.3, while the S&P 500 Index rose by 0.5%.
JPMorgan analyst Samik Chatterjee also shares optimism. Tracking data indicates delivery times for its pricier Pro Max model have shortened, although less than in previous iPhone cycles, supporting the view that initial slow sales are temporary.
Apple's AI initiative, "Apple Intelligence," launched in June, has sparked debate on Wall Street. While hopes for a significant upgrade cycle have buoyed the stock, concerns persist about AI's impact on demand growth and its timeline.
Despite these concerns, Evercore analysts remain focused on AI's long-term potential. Daryanani notes that phased AI implementation could extend the iPhone upgrade cycle, as new features and expanded market coverage drive strong word-of-mouth growth.
