Zhitong Finance App learned that Star Technology analyst Dan Ives said that Apple's (AAPL.US) AI strategy may increase the company's valuation by about $75 per share because the company is seeking to use AI to drive equipment upgrades and increase service revenue. Ives gave Apple shares an “outperforming market” rating, with a target price of $400.
Ives stated in the report, “Apple is entering a new stage in the development of its ecosystem. At this stage, AI closely integrates hardware, software, and services, not only to promote equipment upgrades and increase user unit prices, but will also lead the next phase of the growth strategy.” Given Apple's huge user base, Ives estimates that AI-related revenue may eventually account for more than 15% of service revenue.
The analyst said that Apple's focus on integrating AI into its products while emphasizing privacy and device-side processing may help make the technology part of consumers' everyday lives. He also anticipates that AI will create new opportunities in fields such as health, fitness, finance, and gaming, and that developers will play a role in building these services.
Ives anticipates that the iPhone 18 upgrade cycle will support Apple in the next few quarters. He estimates that around 375 million iPhones have not been upgraded for more than four years, creating a huge pool of potential buyers.
Ives also anticipates that Apple's folding screen iPhone Duo will bring additional demand, and it is estimated that sales will reach about 10 million units in the next few quarters.
According to Tipranks data, Wall Street analysts are clearly divided in their views on Apple. Of the 31 analysts covering the stock, 16 gave a “buy” rating, 11 gave a “hold” rating, and 4 gave a “sell” rating. The consensus rating was “moderate buy”, and the average target price was $337.51, which is slightly lower than the latest closing price.
