Evercore ISI analysts believe Apple (NASDAQ:AAPL)'s stock price has room to grow, citing the potential for significantly higher iPhone sales in fiscal year 2025 (FY25) driven by Artificial Intelligence (AI) features.
The investment firm lifted its price target for the stock from $220 to $250, maintaining an Outperform rating.
Evercore points to Apple's decision to limit "Apple Intelligence" features to its higher-end iPhone 15 Pro and upcoming iPhone 16 models, believing this will create a strong incentive for upgrades.
"If Apple can deliver on the features demonstrated at WWDC, we think consumers will find Apple Intelligence compelling enough to shorten the replacement cycle and induce iPhone 13/14 Pro and iPhone 15 owners to upgrade more quickly," says Evercore.
Evercore believes the current consensus forecast of 3% iPhone revenue growth in FY25 is too low. They estimate that even a one-month reduction in the typical upgrade cycle could result in an additional $14 billion in iPhone sales, representing a 7% increase over current FY25 expectations.
Evercore highlights Apple's staggered rollout of AI features, with some functionality delayed until later in the calendar year 2025 (CY25). They argue that this will extend the upgrade cycle as positive word-of-mouth and new features continue to emerge.
Based on this, Evercore is raising its FY25 iPhone revenue growth estimate from 4% to 7%, with the potential for growth to reach double digits. They increased their price target to $250 per share to reflect their bullish outlook.
"Can Apple Intelligence Drive Upgrades?" is a key question for Evercore, but early investor reaction since Apple's WWDC event suggests growing optimism about a potential iPhone "super cycle." Evercore believes that if Apple delivers on its promises, AI will be a compelling reason for users to upgrade. They also acknowledge a growing appreciation for Apple's AI strategy.
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