On Thursday, Wedbush Securities increased its price target on Apple Inc. (NASDAQ:AAPL) shares to $325 from the previous target of $300. The firm continues to hold an Outperform rating on the tech giant's stock, which is currently trading near its 52-week high of $258.21. According to InvestingPro data, Apple's stock has delivered an impressive 34.4% return over the past year.
Wedbush analysts cited the onset of a "golden era of growth" for Apple as the primary reason for the price target adjustment. According to the firm, Apple is entering a multi-year iPhone upgrade cycle propelled by artificial intelligence (AI) advancements, a factor that is currently undervalued by the market.
With annual revenue of $391 billion and a P/E ratio of 42.1x, InvestingPro analysis suggests the stock is trading above its Fair Value, with 14+ additional ProTips available for subscribers.
The analysts believe that Apple's AI strategy, which is in the early stages of development with Apple Intelligence, will significantly alter the company's growth narrative in the years to come. With numerous applications in development centered around Apple Intelligence, Wedbush anticipates this will open up a new multi-billion dollar annual revenue stream in the Services sector.
This new development is expected to act as a catalyst for iPhone upgrades across the board in the next 12 to 18 months. Wedbush's outlook also includes a bold projection that Apple is on track to achieve a $4 trillion market capitalization, potentially becoming the first company to reach this milestone. Currently valued at $3.9 trillion, Apple maintains strong financials with a gross profit margin of 46.2% and receives a "GOOD" overall financial health score from InvestingPro's comprehensive analysis system.
The firm's statement underscores the potential they see in Apple's evolving AI initiatives and how these efforts could translate into substantial growth for the company's service offerings and hardware upgrades.
In other recent news, Apple has been involved in a series of significant developments. The tech giant has expressed interest in participating in Google (NASDAQ:GOOGL)'s U.S. antitrust trial, citing concerns over revenue-sharing contracts that yielded an estimated $20 billion in 2022. Apple has also been in the spotlight for its negotiations with Chinese tech giants Tencent (HK:0700) and ByteDance to integrate their artificial intelligence (AI) models into iPhones in China, a move that reportedly resulted in a dip in Baidu (NASDAQ:BIDU)'s stock.
Wedbush Securities has maintained an optimistic stance on Apple, noting the successful performance of the iPhone 16 and the anticipated rollout of Apple Intelligence in China. The firm also highlighted the introduction of AI features, including integration with ChatGPT, which is expected to drive growth and consumer engagement. However, Apple has terminated its project to develop an iPhone hardware subscription service, signaling a change in its approach to payment services.
On the analyst front, JPMorgan (NYSE:JPM) reiterated its Overweight rating on Apple, focusing on the potential impact of AI on product volumes and Apple's share price.
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