TD Cowen analysts raised their price target for Buy-rated Apple (NASDAQ:AAPL) to $250 from $220, citing anticipated upgrades in artificial intelligence (AI) and favorable trends in emerging markets.
In their latest note, the firm projects a positive outlook for Apple's iPhone and other product lines, highlighting potential growth driven by AI enhancements and strong gross margins.
TD Cowen models Apple to report 4% year-over-year revenue growth for the June quarter and guide for a 5% increase in the September quarter.
Despite potential headwinds, including a modest loss of market share in China to Huawei and macroeconomic impacts on consumer demand, analysts remain optimistic about Apple's future performance.
They expect iPhone revenues to return to year-over-year growth by December and foresee significant upgrades in AI hardware driving a 12% increase in unit sales to 240 million in 2025.
"AI iPhone upgrades likely modest in C2H24 but material in CY25 as we raise our sell-in forecast to 240M units," TD Cowen stated. They also highlighted that emerging markets demand and strong gross margins, estimated at around 46%, continue to be tailwinds for Apple.
In terms of other products, analysts expect the refreshed iPad portfolio, including M4 chip-based iPad Pros, to achieve double-digit year-over-year sales growth in the upcoming quarters. For Mac, revenue is anticipated to remain flat, but the introduction of M4-based Macs supporting AI features could provide a boost.
TD Cowen also noted healthy growth in Apple's services segment, with a projected 13% year-over-year increase for the June quarter.
However, they state that new App Store and payment policies in Europe may present a modest revenue headwind, although the risk is considered manageable.
Despite challenges, TD Cowen remains positive, stating, "early consumer interest in AI can accelerate iPhone and Mac back onto positive growth trends." They see the next iPhone launch event in September as a potential catalyst for further growth.