Apple (AAPL) stock surged 7% on Tuesday to reach a record-high close for the first time in 2024 as investors digested the announcement of its AI platform, Apple Intelligence.
Shares of the iPhone maker were down slightly, less than 1%, in premarket trading on Wednesday.
After dropping during and after the company’s WWDC conference on Monday, shares rose again as some Wall Street analysts welcomed the company’s announcement, notching its best daily performance since November 2022.
“When you separate the signal from the noise, you see Apple introducing unprecedented capabilities and integrating AI into our daily lives,” said Gil Luria.
Following Monday’s event, Luria upgraded Apple to a “neutral buy” and raised his price target to $230 from $200.
On Monday, Apple announced “Apple Intelligence,” its long-awaited foray into generative AI. The company said the platform will be integrated into all of its hardware and software products, from iPhones and Macs to email, messaging and photos. Apple Intelligence will be available this fall on iPhone 15 Pro, iPads and Macs with Apple’s M1-series or later chips.
Key launch features include updates to Siri, allowing you to search on your phone for addresses sent to you in Messages and use voice prompts to search for photos in your phone’s Photo Library. Apple also released new software updates for its iPhone, watches and computer products.
“Our experience conducting consumer research during the launch of the previous generation iPhone suggests that hardware upgrade cycles will likely be driven by a series of feature upgrades across a range of apps that, in total… will provide a reason to upgrade over the next few years,” JPMorgan senior analyst Samik Chatterjee wrote in a client note on Monday.
He added that “the release of AI capabilities for Mac, iPad and iPhone will support upgrade cycles for all devices.” A partnership with ChatGPT operator OpenAI had already been completed.
After briefly being overtaken by Nvidia (NVDA), the iPhone maker’s stock is once again the second most valuable company in the world (after Microsoft), with a market capitalization of more than $3.1 trillion.
After a weak start to the year on concerns about slowing iPhone demand, Apple shares have risen more than 15% in the past two months. Analysts like Luria and Chatterjee believe the new AI capabilities won’t be available until the iPhone 15 Pro or later generations, so the next iPhone upgrade cycle could be coming.
“People buying new phones this holiday season will notice this great feature,” Luria said. “They’ll be showing it to friends and family, and the product upgrade cycle will extend over the coming months and quarters.”
This should be a big catalyst for the stock moving forward, Luria argued.
“Apple’s shares are sluggish because its revenues aren’t growing,” Luria said. “This will likely accelerate Apple’s overall growth to low to mid single digits, maybe even high single digits, over the next year or two. That could drive Apple stock higher.”