Bank of America has painted a bullish picture for Apple, predicting a 23% surge in the tech giant’s stock value, thanks to the burgeoning influence of Artificial Intelligence (AI) in driving iPhone upgrades. Following a previous neutral stance, the bank has now shifted its rating to “Buy,” boosting its price target from $208 to $225. This optimism sparked in September 2022, hinges on the transformative impact AI is expected to have on iPhone user experience.
According to Bank of America analyst Wasmi Mohan, the key driver of this anticipated stock rally is the integration of advanced AI technologies in the iPhone, expected to trigger a significant upgrade cycle. Mohan observes that the majority of iPhone users – over 70%, based on the bank’s surveys – are still operating iPhone 13 or older models. This presents a massive opportunity for Apple as users look to upgrade to more powerful devices capable of supporting AI-driven applications.
“The iPhone 13, iPhone 11, and iPhone 12 remain the most widely used models among our U.S. survey respondents,” Mohan notes, indicating a substantial market ready for the next wave of technological upgrades.
Mohan anticipates a range of potential AI features in upcoming iPhone models, including real-time voice translation, advanced camera zoom capabilities, sophisticated text and email editing tools, and the integration of comprehensive language models. “Apple has already been leveraging AI in photo and video applications, and we anticipate a deeper incorporation of on-device AI, possibly starting with the iPhone 16,” Mohan adds.
Beyond AI, other factors contributing to Mohan’s upbeat outlook include expected growth in Apple’s Services division, improved profit margins, ongoing capital returns through stock buybacks and dividends, and robust sales projections for the upcoming Vision Pro device.
“Vision Pro’s spatial computing capabilities could eventually eclipse iPad revenues, offering unique services and applications that drive further growth,” Mohan asserts. The bank predicts that Apple might initially sell hundreds of thousands of Vision Pro units to enthusiasts in 2024, with potential millions in sales as the price drops to a more accessible $1,500 to $2,000 range, down from the initial $3,500.
In conclusion, Bank of America’s revised stance on Apple reflects a broader industry trend where AI capabilities are increasingly becoming a critical factor in consumer technology upgrades, potentially heralding a new era of growth and innovation for the tech giant.