Apple wins after Morgan Stanley names stock ‘top pick’ for AI efforts

Shares of Apple ( AAPL ) rose about 2% on Monday after Morgan Stanley ( MS ) raised its price target on the iPhone maker’s stock and labeled the stock a “top pick,” citing the company’s AI efforts company as a boost to device sales. .

In what was seen as a move to catch up with Alphabet’s Google- and Microsoft-backed OpenAI, the iPad maker unveiled Apple Intelligence last month, enticing customers to upgrade their devices to use the new technology.

Apple shares, which have risen nearly 20% this year, rose to $235.37 before the bell, giving the company a market value of about $3.6 trillion, the highest in the world.

“Apple Intelligence is a clear catalyst to boost iPhone and iPad shipments,” Morgan Stanley analysts said.

The new technology is compatible with just 8% of iPhone and iPad devices and Apple currently has 1.3 billion smartphones in use by customers, the analysts said. They added that the company could sell nearly 500 million iPhones in the next two years.

Morgan Stanley, which previously expected Apple to sell between 230 million and 235 million iPhones annually over the next two years, raised its price target for the company’s shares from $216 to $273.

The stock has an average buy rating with an average price target of $217, and has outperformed the S&P 500 index this year, according to LSEG data.

Industry analysts expect Samsung and Apple to lead the recovery of the global smartphone market this year, given the buzz surrounding GenAI-enabled smartphones.

Apple sold 45.2 million smartphones worldwide in the three months ending in June, down from 44.5 million a year earlier, but its market share fell to 15.8% from 16.6% in the same period.

(Reporting by Akash Sriram in Bengaluru; Editing by Shounak Dasgupta)