Despite a rocky start to 2024, Apple’s stock is poised for a significant rebound, according to a recent analysis by JPMorgan. With a projected 25% upside, Apple’s future looks promising for investors, driven by two key factors: an anticipated AI-led iPhone upgrade cycle and an attractive valuation following this year’s market performance.
As of early trading, Apple’s shares are trading at $168.71, but JPMorgan’s target of $210 per share underscores the confidence in Apple’s growth trajectory. The investment bank attributes its optimism to the tech giant’s upcoming innovations and the market’s adjustment to Apple’s valuation.
One of the main drivers of this anticipated growth is the expected introduction of AI technology in the iPhone lineup. Echoing the surge in sales driven by the transition to 5G, the deployment of on-device AI features is anticipated to spark a new wave of iPhone upgrades. This technology is expected to be exclusive to newer models, thereby encouraging users to upgrade. JPMorgan predicts that the iPhone 17, likely to be Apple’s inaugural “AI phone,” will debut in September 2025, propelling iPhone sales to an estimated 240 million units by 2026.
This innovative product cycle is projected to significantly boost Apple’s revenue and earnings growth to 14% and 21% in fiscal year 2026, respectively. Such performance would not only eclipse the more conservative forecasts for 2024 and 2025 but also place JPMorgan’s earnings predictions 7% above the consensus.
The second pillar supporting Apple’s potential stock rise is its current valuation. After a 13.3% dip year-to-date, Apple’s shares are now trading at a more attractive multiple, reminiscent of the range observed during the 5G momentum. This adjustment in valuation, juxtaposed against the backdrop of weakening hardware demand and a challenging outlook for services growth, has reignited interest among a broader investor base. This group had previously been hesitant to engage with Apple’s premium valuation, given its relatively modest growth projections compared to other tech megacaps.
However, JPMorgan cautions investors about potential near-term risks, citing competitive pressures from China and heightened regulatory scrutiny that could impact Apple. Despite these challenges, the bank’s analysis suggests a robust long-term outlook for Apple, underpinned by strategic advancements in AI technology and an appealing valuation that beckons investors to consider the tech giant’s stock for their portfolios.