Apple shares surged 7% to a record high on Tuesday as Wall Street expressed optimism that the company's newly announced AI plans will drive a new wave of iPhone purchases.
Described as a “game changer” by Apple CEO Tim Cook, the Cupertino, California-based company announced a partnership with ChatGPT maker OpenAI and an in-house platform for its devices called “Apple Intelligence,” to be launched this fall.
New features include major AI improvements to the Siri voice assistant, a new “Genmoji” system for creating custom images, a range of AI-powered writing tools, and more.
The AI features are only available on Apple's newest and most powerful devices, including the iPhone Pro 15 Max and Macs with M-series computer chips. Predictions of a “super cycle” in iPhone sales have come as Apple prepares to launch its next iPhone models later this year.
Evercore ISI analyst Amit Daryanani said the Apple event gave him “more confidence” in the company's AI plans.
“Limiting Apple Intelligence to iPhones sold within the past year strengthens our belief that AI will help spark an iPhone supercycle,” Daryanani said in a note to clients. “We remain confident in Apple's AI strategy and its ability to deliver GenAI to users without tens of billions of dollars of GPU capital expenditures.”
Analysts at Bank of America and Morgan Stanley also suggested in client notes that Apple's AI push could boost iPhone sales, according to CNBC.
Apple's stock price closed at $207.15, adding a whopping $180 billion to its market capitalization.
The stock price surge has given Apple a valuation of $3.15 trillion, making it the world's most valuable company after Microsoft.
The announcement drew strong support on Wall Street, with at least 13 research analysts raising their price targets for the company following the announcement.
Wedbush analyst Daniel Ives also reacted bullishly to the announcement, maintaining his “outperform” rating and $275 price target on Apple shares.
“We believe Apple's AI strategy should leverage its premium installed base around personalization and LLM in mobile, driving an AI-driven iPhone upgrade cycle starting with the iPhone 16 and altering Cupertino's growth trajectory,” Ives said in the note.
Tuesday's rise marked a reversal of the trend from the previous day.
Apple closed down about 2% on Monday after the presentation, with one analyst telling The Washington Post that investors may have been disappointed by the company's lack of AI innovation.
With post wire
