Morgan Stanley names Apple a top pick, driving record highs as AI platform sparks device upgrades
Apple Inc. reached a record high on Monday after Morgan Stanley named it a top pick, seeing the launch of the company’s artificial intelligence platform as a significant driver for users to upgrade their devices, according to BNN Bloomberg.
Analyst Erik Woodring raised his price target on Apple’s shares to US$273, making it the third highest among analysts tracked by Bloomberg. He believes that Apple Intelligence will drive a record number of device upgrades, calling it a “clear catalyst” for a multi-year upgrade cycle.
Loop Capital, holding the highest price target for Apple shares, upgraded the stock to buy from hold and increased its objective to $300 from $170.
Analyst Ananda Baruah noted that Apple is poised to become the generative AI “base camp” for consumers, similar to its influence on digital content with the iPod and social media with the iPhone.
Woodring predicts Apple will ship nearly 500 million iPhones over the next two years, surpassing the previous record cycle of 2021-2022.
In June, Apple unveiled its suite of AI services at the Worldwide Developers Conference, where Senior Vice President Craig Federighi described it as “AI for the rest of us.” Shares hit their first record high of the year following this announcement.
Apple shares rose as much as 2.9 percent to $237.23. Since the reveal of Apple Intelligence, shares have increased by 17 percent, outperforming the Nasdaq 100 Index’s 7 percent gain during the same period.
Woodring, who has an overweight rating on the stock, wrote, “We believe there is a record level of pent-up demand entering the iPhone 16 cycle later this year. Following WWDC, where Apple debuted Apple Intelligence, we have even greater conviction that FY25 could mark the start of a multi-year device refresh cycle.”
Apple Intelligence will provide “much improved, and unique-to-the-Apple-ecosystem utility value” for over 1.3 billion users, Woodring said. This will drive device upgrades and accelerate product replacement cycles, a key catalyst that has historically boosted Apple stock performance.
However, only 15 percent of Apple’s total installed user base will support Apple Intelligence due to its limitation to devices using A17 Pro and M-Series chips, Woodring pointed out.
While most Mac users can utilize it, only 8 percent of current iPhone and iPad users can power the AI platform. Woodring estimates that more than 1.2 billion iPhones, iPads, and Macs will need upgrades.
Initially, Apple Intelligence will be available only to US English iPhone users when it launches this fall.
Woodring expects that the expansion of non-English functionality will add even more value to users over the next 12 to 24 months, positioning Apple for a return to year-over-year unit growth in FY2025 and a potential major cycle in FY2026.
Bloomberg News reported that Apple’s annual sales in India reached nearly $8bn, highlighting a rapidly growing market where the company now assembles more devices and operates two flagship stores.
