Apple’s stock (AAPL) received a much-needed boost on Thursday with a Buy rating from Bank of America analyst Wamsi Mohan, who upgraded his outlook on the company and raised its price target. Apple shares rose nearly 3% on Thursday afternoon.
In his analysis, Mohan upgraded Apple from Neutral to Buy and increased the price target from $208 to $225. Mohan believes that the company will benefit from several industry trends and the large number of iPhone users who will need to upgrade to newer models in the coming years.
Specifically, Mohan stated that he expects a “strong multi-year iPhone upgrade cycle driven by the need for the latest hardware enabling Generative AI features in 2024/2025.” He also expects improved growth in Apple’s services division and stated that the potential legal risks the company may face are “manageable.”
Apple is also preparing for the launch of its most ambitious product yet – Vision Pro goggles. This is the first new product category for the company since the release of the Apple Watch. Priced at $3,499, Vision Pro will test Apple’s ability to create a new type of device that could be the future of computing.
The analysis of Vision Pro conducted by Engadget journalists Dana Wollman and Cherlynn Low praised the device’s technological capabilities and entertainment factor, but criticized its keyboard fluidity. Testing Vision Pro for the first time in June at the WWDC Apple event, I was impressed. It is definitely the best glasses available, but the price may be hard to swallow for the average consumer.
However, Mohan argues that with the advancement of spatial computing, Vision Pro could surpass iPad revenues for Apple. In 2023, the company generated $28.3 billion in iPad sales compared to $200.6 billion in iPhone sales.
Mohan’s rating upgrade comes after price cuts on Apple’s stock by Barclays, Piper Sandler, and Redburn Atlantic. Analysts at these firms pointed to slowing iPhone sales, particularly in China, as the major obstacle for the tech giant.
China presents a unique challenge for Apple as the third largest sales region after North America and Europe. In 2023, this region accounted for $72.6 billion in revenue out of the company’s total $383.3 billion.
China can pose a particular problem for Apple as the company must face growing competition from domestic Chinese tech firms such as Huawei and Xiaomi. In particular, Huawei has fully regained its strength in the smartphone market after facing US sanctions.
Meanwhile, Apple’s biggest rival in the smartphone segment, Samsung, announced its new Galaxy S24 series on Wednesday. The phones, set to be released on January 31 with prices ranging from $799 for the Galaxy S24 to $1,299 for the S24 Ultra, will feature AI generation functions, including translation features and artificial intelligence for photo editing. If Apple wants to compete on equal footing with its Android counterpart, it will need to introduce some AI generation features in its next iPhone in September.
For now, the focus is on the iPhone 15 and Vision Pro. We will learn more about the results of the iPhone 15 and possibly the results of Vision Pro during Apple’s first quarter earnings announcement on February 1.
Correction: A previous version of this article provided an incorrect Apple price target. We apologize for the error.
Daniel Howley is a technology editor at Yahoo Finance and has been covering the tech industry since 2011. You can follow him on Twitter @DanielHowley.
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Source: Yahoo Finance
The source of the article is from the blog elektrischnederland.nl