Raymond James analysts have lifted their stock price target on Apple (NASDAQ:AAPL) to $250 from $200 a share, describing the company as "a more stable AI play for volatile times."
The firm, which maintained an Outperform rating on the stock, said in its F3Q24 preview that it expects a slight beat in results and an outlook largely in line with previous expectations.
This optimism is based on data from recent conversations in the Asia supply chain, TSM results, and China CAICT data, all indicating positive near-term trends for iPhone and Mac sales.
"We expect a slight beat and largely in-line outlook," the analysts stated, highlighting the company's resilience.
Raymond James analysts noted that while near-term results may not significantly alter the AI narrative, they remain "optimistic that upcoming AI features will drive a multi-year iPhone upgrade cycle."
The analysts pointed to upward revisions in iPhone 16 builds for the second half of 2024, based on supply chain conversations. They also mentioned material changes to the internals of the iPhone 17, suggesting Apple's focus on enhancing on-device AI capabilities.
"Supply chain data also points to material changes to iPhone 17 internals, suggesting that Apple is looking to do more AI on the device," they noted.
Apple's unique position in offering on-device AI features stems from its strong ecosystem, advanced hardware capabilities, and a focus on privacy.
"We believe Apple is in a unique position to offer on-device AI features given its ecosystem strength, hardware capabilities, and privacy focus," the note stated.
The analysts emphasized the early stages of Edge AI, which requires lower capital expenditure and offers faster monetization potential through hardware upgrades.
Raymond James estimates that each 1% of the installed base upgrading to new phones could drive $0.20 of incremental EPS. They foresee $8-$8.5 in EPS power for CY25.