Shares of Apple ( AAPL ) are gaining momentum as Wall Street analysts increasingly bullish on the tech giant, largely due to its AI prospects and growth potential. Bank of America (BAC) has raised its price target on Apple from $230 to $256 per share. Bank of America hardware analyst Wamsi Mohan joins Catalysts to discuss these developments.
Mohan reveals that a recent BofA survey showed “a significant increase” in consumers wanting to upgrade their iPhones in 2024 to access Apple’s new Intelligence features. Based on these findings, he believes this could fuel “a multi-year cycle” of growth for Apple, especially given the significant number of users still using older iPhone models.
“Apple is not the first in the game, generally not, but when they come, you have a high degree of confidence that whatever product they come out with is going to do extremely well,” Mohan told Yahoo Finance.
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This post was written by Angel Smith
Video transcript
Let’s turn our attention to some trending indicators that were watching this Monday morning, Apple shares rose this morning after a series of improvements, citing the potential of its AI software joining us now to discuss, we’ve got a months at Bank of America, and the bullish analyst who recently raised his price target on Apple.
It’s good that you have to talk about it.
I know you’ve grown confident in a multi-year iPhone upgrade cycle, and that’s part of what led to your price target increase.
Talk to me about where that confidence comes from.
Yes, good morning.
Thanks for having me.
Uh Yeah, look, I, I mean, I think we, we ran a survey, which is pretty broad-based for major geographic regions.
Uh And it’s been a long poll.
We have been running this since 2018.
It’s very unusual for Apple to talk about future products and releases, isn’t it?
As they basically said, the iPhone 15 pro and newer would be needed to run some of these Apple Intelligence features.
So we thought the survey would be somewhat appropriate to see after the worldwide developer conference that people actually change their decision to buy an iPhone in 2024.
And we saw significant usage and the number of people who basically said yes, we would like to improve our phone this year based on the future based on the functionality of the features that Apple is introducing.
So we think that, you know, this will be a start.
We clearly know that not all features will be available to everyone at the same time.
So we actually think of it as more of a multi-year cycle.
Ugh considering the survey also shows that age based on installation is actually pretty old.
There are still plenty of eleven, twelve and thirteen iPhones in the install base.
So we’re actually expecting a big chunk of the base install to come out for a fresh week at the same time that all this new functionality was starting to hit the tumor.
Yes, it was interesting.
The night of the worldwide developer conference, the stock really wasn’t moving that much straight up and then you had a bunch of commentary around it and the news of the day and that really led to some broader gains for Apple.
So I’m curious from your perspective, where do you understand the clarity of the hype versus the actual excitement that will translate into sales about these iPhone AI features?
Yes.
Absolutely.
Great question.
Look, I, I think when, when Apple tends to introduce products.
Uh, they’re really consumer-ready, aren’t they?
So we don’t see them jumping the gun, not generally first to market, but at the same time, and we have a bunch of phones already from, from Chinese competitors from Samsung and others that have some of these features. HE.
So Apple isn’t first in the game, generally not.
But when they come, you, you have a high degree that whatever product they’re coming with is going to do extremely well.
So now from a similar perspective, you know, how much of this is hype versus reality, right?
I think when you look at the functionality of the features, this is where you can start thinking about a step change in productivity.
We all aim for so much productivity in our daily lives, work lives and, and try to optimize, but really from an iphone perspective and in our little lives, we haven’t had the opportunity to really take advantage of some of these productivity initiative. , or not?
And what I’m talking about is just, you know, ordering in restaurants or, or going from one place to another.
We have Ubers, a lot of these things can actually be automated, but we go and go through so many different apps to try to put this into just our daily routine.
And so, what I think is that, you know, that’s going to take some time to roll out, and they also introduced a worldwide developer conference, very deep integration with Siri.
I think that’s the part that really wasn’t well understood by the wider community is how deep this integration can go and what changes it can bring.
And I think once people get comfortable with the fact that the look, I mean, Siri is going to be an assistant that you don’t want to turn off like you wanted to in the past.
But rather the one you would like can help you with all your features.
I just think we’re entering a new paradigm here where consumers are really going to see this incremental productivity benefit over time.
And I think that’s really the key to understanding this improvement cycle and as those features roll out and over the next few quarters and more and more developers integrate, Siri even deeper, it could start with Uber, maybe Lyft would follow, you might see the table open or others start to integrate.
So, as you see, it really snowballs into that kind of effect of people wanting to upgrade for all future functionality.