① Bank of America released a report saying that with the support of artificial intelligence technology, Apple's iPhone upgrade cycle is expected to accelerate, and the company's stock price is expected to soar 23%. ② Bank of America's views are quite different from those of other Wall Street investment banks. At the beginning of January this year, Apple was successively downgraded by several Wall Street investment banks, which once raised concerns about the company's stock price prospects.
Financial Services Association, January 19 (Editor Liu Rui) At the beginning of the year, when several Wall Street investment banks successively downgraded Apple ratings, Bank of America has recently become the most “strong” Apple financial giant on Wall Street.
On Thursday EST, Bank of America released a report saying that with the support of artificial intelligence technology, Apple's iPhone upgrade cycle is expected to accelerate, and the company's stock price is expected to soar 23%.
The bank upgraded Apple's rating from “neutral” to “buy” and raised its price target from $208 to $225. Previously, Bank of America downgraded Apple's rating to “neutral” in September 2022.
Artificial intelligence will speed up the iPhone replacement cycle
The biggest reason for Bank of America's rating increase this time is that Bank of America believes that as iPhones integrate new artificial intelligence technology in the future, it is expected to drive a strong upgrade cycle for iPhone users who are still using old phones.
Bank of America analyst Wasmi Mohan (Wasmi Mohan) said, “Apple should continue to see the upgrade needs of users of old devices. In particular, artificial intelligence applications will require higher processor power.”
According to an internal survey of iPhone users, the bank estimates that over 70% of iPhone users currently use iPhone 13 or older models.
Mohan said, “Among our American respondents, the three most popular iPhones were the iPhone 13, iPhone 11, and iPhone 12.”
In the future, it is anticipated that new iPhone models may incorporate more artificial intelligence features, including real-time voice translation, enhanced camera scaling, better text and email editing tools, and a fully integrated large-scale language model.
Mohan said, “Apple is already using artificial intelligence technology in several photo and video apps, but as the hardware improves, we think Apple can combine artificial intelligence on devices with some of these features in the next few years, starting with the iPhone 16.”
Vision Pro sales are expected to be strong
Mohan also said that other reasons why he is optimistic about Apple include the company's rapid growth in service departments, increased profit margins, continued capital returns through share repurchases and dividends, and strong sales of the upcoming Vision Pro devices are expected.
Mohan said, “As spatial computing technology develops, providing differentiated use cases increases, thereby driving service upgrades, Vision Pro (sales volume) is likely to surpass the iPad over time.”
The bank estimates that Apple will sell hundreds of thousands of Vision Pro units to “Fruit Powder” in 2024. And once the price of Vision Pro drops from the current $3,500 to $1,500 to $2,000, sales of this product can soar to millions of units.
After the rating was raised, Apple's stock price surged more than 3% on Thursday.
Apple was “downgraded” one after another at the beginning of the year
It is worth mentioning that Bank of America's latest views on Apple are quite different from those of several other Wall Street investment banks. At the beginning of January this year, Apple was successively downgraded by several Wall Street investment banks, which once raised concerns about the company's stock price prospects.
On January 2, the beginning of the new year, Barclays downgraded Apple's stock rating from holding to low. This is the first time since 2019 that the bank has downgraded Apple to this rating.
Immediately after January 4, Piper Sandler's chief analyst Harsh Kumar also downgraded Apple's rating from overrated to neutral. On January 10, Redburn Atlantic analyst James Cordwell also downgraded Apple's rating from buying to neutral.
Several Wall Street investment banks expect sales of Apple's iPhone and service departments to weaken in 2024. At the same time, Barclays is not optimistic about the prospects of Vision Pro, believing that its price is high, and is not expected to bring about large-scale revenue growth.
In addition, analysts also mentioned that negative issues such as Apple Watch patent disputes and antitrust fights may cause problems for Apple's future development.