Apple CEO Tim Cook gestures during the company's annual developers conference event at the company's headquarters in Cupertino, California, USA, June 10, 2024.
Carlos Barria | Reuters
Apple shares rose 7% to close at a record high of $207.15 per share on Tuesday, a day after the company announced its long-awaited artificial intelligence efforts at its annual developers conference on Monday.
During the event, Apple announced a variety of new AI features, including an overhaul of its voice assistant Siri, integration with OpenAI's ChatGPT, a range of assistant writing tools, and new customizable emojis. The company is pitching these features as AI for the masses, but users will likely need to upgrade their iPhones to access these tools.
Apple Inc.'s stock price movement on Tuesday pushed the company above its all-time high hit on Dec. 14. The company's developer conference was a welcome sign for investors who have been keeping an eye on how Apple will capitalize on the ongoing AI boom.
Morgan Stanley analysts say Apple's AI capabilities will position the company as “the most differentiated digital agent for consumers,” and they believe the features will encourage consumers to upgrade their iPhones, “accelerating device replacement cycles.”
While Apple still has to deliver when its AI features first become available in the fall, they said they believe the “foundation is in place for a return to growth and more sustained improved performance.”
“With the key details we were focused on leading up to the event coming to fruition at WWDC, we are further strengthened in our belief that Apple is on the cusp of a multi-year product refresh, which supports our OW rating, $216 price target and $270 bull case assessment,” the analysts wrote in a note on Tuesday.
Analysts at Bank of America were also optimistic about Apple's announcements, saying the features will lead to an “AI-enabled IntelliiPhone upgrade cycle.” The analysts maintained a buy recommendation on the company's stock, citing the prospect of a multi-year upgrade cycle, potential gross margin growth, and services growth.
Evercore analysts said they emerged from the conference with “increased confidence” in Apple's AI strategy, especially as they believe it will encourage users to upgrade their devices.
“Limiting Apple Intelligence to iPhones sold within the past year strengthens our confidence that AI can help kick-start an iPhone super cycle,” the analysts said in a Monday note.
—CNBC's Michael Bloom contributed to this report
