Apple (AAPL) shares surged more than 5% to an intraday record on Tuesday as investors digested the company's announcement of its AI platform, Apple Intelligence.
The stock price fell on Monday during and after the company's WWDC conference, but rose after some Wall Street analysts welcomed the company's announcement.
“When you step away from the noise and look at the signal, you see this is an unprecedented capability that Apple is introducing and how they are integrating AI into everyday life,” Gil Luria, managing director at DA Davidson, told Yahoo Finance (in the video above).
After Monday's event, Luria upgraded Apple's stock rating to buy from neutral and increased his price target to $230 from $200.
Apple on Monday unveiled “Apple Intelligence,” its long-awaited foray into the world of generative AI. The company said the platform will be integrated into its hardware and software products, from iPhones and Macs to Mail, Messages and Photos. Apple Intelligence will be available on the iPhone 15 Pro later this fall, as well as on iPads and Macs with Apple's M1-series chips and later.
Key features of the announcement included updates to Siri that will allow the phone to, for example, parse addresses sent in messages and search for photos in the phone's photo library based on voice prompts. Apple also announced new software updates for its iPhones, watches and computer products.
“Our experience researching consumers around previous iPhone launches shows that the hardware upgrade cycle is driven by a series of feature upgrades across different apps, which collectively provide a reason to upgrade over the next few years,” JPMorgan senior analyst Samik Chatterjee wrote in a client note on Monday.
He added that “as AI capabilities are released to Mac, iPad and iPhone, they will be supported across the upgrade cycle for all devices.”
The announcement caps off a month of excitement surrounding the company's shares, as rumors of several news stories had already been circulating, including a partnership with ChatGPT operator OpenAI.
After briefly being overtaken by Nvidia (NVDA), the iPhone maker's shares have risen to a market cap of more than $3.1 trillion, and it is now back as the second-most valuable company in the world behind Microsoft (MSFT).
After a sluggish start to the year amid concerns about slowing iPhone demand, Apple shares have risen more than 15% in the past two months. Analysts such as Luria and Chatterjee believe the new AI features will only be available in the iPhone 15 Pro and beyond, signaling that the next iPhone upgrade cycle is on the way.
“People buying new phones this holiday season will see this great feature,” Luria said. “They'll show it to their friends and family, and it will play out throughout the product upgrade cycle over the coming months and quarters.”
Luria argued that this should be an important catalyst for stock prices moving forward.
“Apple's stock price has been flat because of a lack of revenue growth,” Luria said. “We believe Apple's overall growth rate will accelerate from low to mid single digits to possibly even high single digits over the next year or two, which should drive Apple's stock price higher.”
Josh Shaffer is a reporter for Yahoo Finance. Follow him on X Follow.
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