Finance

Apple shares soar to record highs after AI announcements

Published

3 weeks ago

June 11, 2024

Apple shares soar to record highs after AI announcements

Shares of Apple (AAPL) rose 7% on Tuesday, hitting an all-time high for the first time in 2024 as investors digested the announcement of its AI platform, Apple Intelligence.

After falling Monday during and after the company’s WWDC conference, the stock rose higher for its best single-day performance since November 2022, when some Wall Street analysts cheered the company’s announcements.

“When you look at the signal away from the noise, you realize that this is an unprecedented capability that Apple is going to introduce and that it is going to integrate AI into everyday life,” DA Davidson director Gil Luria told Yahoo Finance (video above).

After Monday’s event, Luria upgraded Apple to Buy from Neutral and raised his price target from $200 to $230.

On Monday, Apple announced “Apple Intelligence,” its long-awaited foray into the generative AI space. The company said the platform would be integrated into the company’s hardware and software products ranging from the iPhone and Mac to email, messaging and photos. Apple Intelligence will be available later this fall for the iPhone 15 Pro and iPads and Macs with Apple’s M1 series chips and newer.

Key features of the launch include updates to Siri, which now lets you do things like parse phones by addresses sent in messages or find photos in a phone’s photo library based on voice prompts. Apple also launched new software updates for its iPhone, watches and computer products.

“Our experience with consumer surveys from previous generations of iPhone launches tells us that the hardware upgrade cycle is driven more by a collection of feature upgrades across applications, which in total will provide reasons to upgrade in the coming years,” he says. JPMorgan senior analyst Samik Chatterjee wrote this in a letter to clients on Monday.

He added: “The release of the AI features on Mac, iPads and iPhones will support an upgrade cycle on all devices.”

The announcements capped a month of excitement for the stock, as rumors around some of the news, including a partnership with ChatGPT operator OpenAI, were already percolating.

After briefly being passed by Nvidia (NVDA), the iPhone maker’s stock is now back as the second most valuable company (after Microsoft) in the world with a market cap of more than $3.1 trillion.

After a slow start to the year amid concerns about declining demand for iPhones, Apple shares are now up more than 15% in the past two months. Analysts like Luria and Chatterjee believe the next iPhone upgrade cycle could be on the horizon as the new AI features will only come to iPhone 15 pro and later generations.

“When people buy new phones this holiday season, they will see this great functionality,” Luria said. “They’re going to show it to their friends and family and the product upgrade cycle will happen over the coming months and quarters.”

According to Luria, this should be an important catalyst for the share price development.

“Stock prices are flat because there has been no revenue growth at Apple,” Luria said. “Now we think this could accelerate Apple’s overall growth from low single digits to mid, maybe even high single digits over the next two years. That’s what could drive Apple’s stock.”