Apple (AAPL, Financial) has seen its stock rise as concerns over weak iPhone demand start to diminish. The stock gained approximately 3% over two consecutive days. On Tuesday, Apple shares increased by 1.1% to $233.85, marking the highest closing price since July 16, and reaching an intraday record of $237.49. This came despite a 1% decline in the Nasdaq Composite Index, primarily due to disappointing forecasts from ASML (ASML), which affected the tech sector's performance.
Apple investors have faced a complex period analyzing fluctuating iPhone demand data from various research firms and analysts. However, the optimistic outlook from Wall Street analysts this week has seemingly propelled Apple's stock upward. In June, Apple announced the launch of its generative AI software, Apple Intelligence, generating excitement among consumers and investors. Analysts have been speculating whether the iPhone 16 release in September will trigger an upgrade wave for the new technology.
Nonetheless, Apple revealed at the new iPhone launch that Apple Intelligence would not be available immediately. The AI software is expected to launch in the current month, with further releases planned for other countries in the coming months. The delayed release has led some on Wall Street to doubt that a major upgrade cycle for users will occur within the year.
Evercore ISI analyst Amit Daryanani expressed in a research report that the phased rollout of AI features could result in a longer and stronger iPhone upgrade cycle, thanks to the positive word-of-mouth effect. He rates Apple stock as "outperform" with a target price of $250.
Meanwhile, JPMorgan analyst Samik Chatterjee also rates Apple as "overweight" with a target price of $265. According to JPMorgan's Apple product availability tracker, although delivery times for the high-priced Pro Max model have shortened, the reduction is not as significant as in previous iPhone cycles. This observation supports his earlier view that initial weak demand for the iPhone 16 is merely an "anomaly."
Moreover, Apple unveiled a new iPad Mini on Tuesday, which is priced lower than other iPad models but also includes Apple Intelligence features. To date, Apple shares have risen by 22% this year, matching the S&P 500's growth. Apple is scheduled to report its fourth-quarter earnings on October 31, where investors and analysts will closely monitor updates on the demand for new phones and other devices compatible with the AI software.
