Lynx Equity Strategies raised its price target for Apple (NASDAQ:AAPL) shares to $240 from $220 in a note Monday, stating there is "more to go."
Even after the sharp move in the stock post-WWDC, the investment firm does not believe many investors appreciate the real value in the stock.
"The value lies not in gigantic LLMs or snazzy demos. Rather, AAPL's value lies in a rich vein of gold that hyperscale peers do not have access to," added Lynx.
The firm argues that even after the sharp move to the upside last week, the stock has merely caught up with SPX on a year-to-date basis.
"Apple's value lies in its ability to personalize the AI experience for its 2+billion installed base of devices and billion+ paid subscribers based on its access to private data locked up in Apple devices and guarded by Apple's privacy rules," explains Lynx.
From a financial perspective, analysts believe Apple's value lies in its apparent ability to ramp up AI offerings "without having to spend a king's ransom in capex."
Furthermore, analysts believe the debate ought not to be merely about whether the iPhone 16 benefits from an upgrade cycle. They are confident it will, as the iPhone 16 offers a new class of capabilities.
"Gen AI joins a long line of capability upgrades over the years – touch-based apps, 5G connectivity, enhanced cameras - each of which triggered a multi-year device upgrade cycle. After two tepid years of iPhone growth, it is only reasonable to expect pent-up demand from the early adopters," said the firm.
"In keeping with historical precedence, analysts expect iPhone 16 to carry mostly in-house developed Gen AI applications," they add. "Analysts expect iPhone16 to garner demand from early adopters. Analysts expect Gen AI apps developed by 3rd party ISVs to start showing up next year in iPhone17, which should then encourage another round of upgrades, this time from mainstream consumers and enterprise customers."
The firm concludes that they also expect Apple to integrate Gen AI functionality into its Macs, iPads, and even Watches, with the functionality steadily improving over the years, which will then incentivize more users to upgrade the gamut of Apple devices.