Apple Inc. (AAPL) has been experiencing a slowdown in its stock performance among the Magnificent Seven stocks since 2023. However, according to Wedbush analyst Daniel Ives, the tech giant has the potential to turn things around.
Ives has given Apple an “Outperform” rating and set a price target of $250 for its shares. He believes that new Asia supply chain checks indicate a clear stabilization of demand in China, with iPhone units expected to show incremental growth. This validates Ives’ prediction of the iPhone 15 triggering an upgrade cycle that exceeds Street expectations.
Investors were disappointed with Apple’s quarterly results released in early February, as the company reported a year-over-year revenue decline in the China region. However, Ives expects iPhone unit sales to reach 225 million to 230 million units this year, with the average selling price of its flagship device exceeding $900. This is due to a product mix shift towards the two high-end models.
The recent recovery in Apple’s stock can be attributed to investors recognizing that “AI is coming to Cupertino.” They have also realized that the company’s iPhone guidance is conservative and its Services business will continue to experience rock-solid double-digit growth.
Ives expects iPhones to show year-over-year growth during the Lunar New Year holiday period in China, as Apple’s promotional efforts and marketing campaigns have been successful in mainland China. Despite competition from Huawei and geopolitical headwinds, Ives believes that very few consumers are switching out of the Apple ecosystem, which is crucial for Apple’s bullish thesis in China.
The analyst also believes that Apple’s game-changing monetization opportunity lies in introducing a standalone AI App Store for developers, which lays the groundwork for AI growth. He predicts that incremental revenue from the Services business around AI will exceed $5 billion annually, marking the start of a renaissance of growth for Apple.
Additionally, Ives anticipates that Apple will unveil its generative AI technology at the Worldwide Developers Conference (WWDC) in June, followed by the introduction of exclusive AI features on the iPhone 16. He also expects sales of Apple’s Vision Pro to reach 1 million units by 2025.
As of Friday’s closing session, Apple’s stock was up 0.41% at $188.95. Despite its recent struggles, Ives’ bullish outlook suggests that the tech giant has the potential to regain its momentum and deliver significant growth in the coming years.
In conclusion, although Apple has faced challenges in recent years, the company’s focus on AI technology, strong customer loyalty, and growth opportunities in China and the Services business could pave the way for its resurgence in the market. Investors will be closely watching to see if Apple can deliver on its potential and regain its status as a top-performing stock.
