Apple (AAPL) shares are gaining momentum as Wall Street analysts become increasingly bullish on the tech giant, primarily due to the company's AI prospects and growth potential. Bank of America (BAC) raised its price target on Apple to $256 per share from $230. Bank of America IT Hardware Analyst Wamsi Mohan appears on Catalysts to discuss these developments.
Mohan revealed that a recent Bank of America survey showed a “significant increase” in consumers willing to upgrade their iPhone to gain access to new Apple Intelligence features in 2024. Based on these findings, he believes this could trigger a “multi-year growth cycle” for Apple, especially given that a significant number of users are still using older iPhone models.
“Apple is not typically first in an industry, but when they get there it gives them a lot of confidence that whatever product they develop will work very well,” Mohan told Yahoo Finance.
To learn more about expert insights and the latest market trends, click here to watch this full episode of Catalysts.
This post Angel Smith
Video Transcript
Here's a look at trending stocks to watch this Monday morning: Apple shares are rising this morning following a series of upgrades, joining Bank of America a month later and hard analysts who recently raised their price targets for Apple, citing the potential of the company's AI software.
W I'm glad you're here to talk to me about this.
We understand that there is growing confidence in a multi-year iPhone upgrade cycle, which has led to the increased price target.
Tell us where that confidence comes from.
Yes, good morning.
Thank you for inviting me.
Yeah, well, I mean, I think we did a survey that covered pretty broadly across the major geographic regions.
Yes, this is a long-running investigation.
We have been running this since 2018.
It's pretty rare for Apple to actually talk about future products and releases, right?
Essentially, they were saying that you'll need an iPhone 15 Pro or later to run some of these Apple Intelligence features.
Well, we thought this survey would be somewhat pertinent to see if people would actually change their decision to buy an iPhone in 2024 after the Worldwide Developers Conference.
And there was also a meaningful increase in the number of people who essentially said they wanted to upgrade their phone this year with an eye to the future, based on features Apple will introduce.
So we think this is just the beginning.
Of course, we understand that not all features will be available to everyone at the same time.
So we really think of this as a multi-year cycle.
Research also shows that the age of the installed base is actually quite old.
There are still plenty of iPhone 11s, 12s and 13s in the installed base.
So we expect a lot of the installed base to be up and running with a week's worth of freshness at the same time that all these new features start to hit the tumor.
Yes, it was fun.
The stock didn't actually rise much on the night of the Worldwide Developers Conference, but then a flurry of commentary surrounding the conference and the news of the day led to a broader rally for Apple.
So I'm curious from your perspective, where are you coming from when it comes to the AI features in the iPhone, as to whether the hype and actual excitement translates into sales?
Yeah.
absolutely.
That's a great question.
Well, I think when Apple releases a product,
Well, they're really ready for the consumer, right?
That said, we don't expect them to jump in to get ahead of the market prematurely, but at the same time, there are already a number of phones with AI capabilities coming out from Chinese competitors such as Samsung.
So generally speaking, Apple isn't the first to get into the game.
But when they come in, you can be confident that whatever product they develop will work very well.
So, now you know, how much of this is hype and how much is reality?
When you look at the functionality of the features, I think you can start to think about step changes in productivity.
We all try to pursue and optimize many productivity efforts in our daily lives and work, but the reality is that we don't often have the opportunity to actually take advantage of these productivity efforts in our daily lives.
I'm talking about ordering at a restaurant or getting from place to place.
We have Uber and a lot of this stuff can actually be automated, but we rely on a whole host of different apps to keep our daily routines up and running.
So I think it's going to take some time for this to roll out. Also, at the global developer conference, they introduced a very deep integration with Siri.
I think what's not fully understood across the community is how deep this integration can go and what kind of change it will bring.
And I think once people get used to that fact — that is, Siri will become the assistant they don't want to turn off like they did before.
Rather, it will be whatever you want it to be, useful in all functions.
I think we're entering a new paradigm where consumers will actually see the benefits of increased productivity over time.
And I think that's really important to understand about this upgrade cycle. As these features roll out and over the next few quarters, as more developers integrate and Siri gets more deeply integrated, we'll start to see Uber start to integrate, maybe Lyft will follow, maybe Open Table and others.
As you can see, this snowballs and creates an effect where people want to upgrade for all sorts of future features.
