AI Opportunity Merits New Street-High Price Target for Apple (AAPL) Stock

Apple (NASDAQ:AAPL) has famously kept its AI efforts in check, but that might all change soon.

So says Wedbush analyst Daniel Ives, who makes the case that the AI age is finally coming to Apple. “We believe Apple is the sleeping tech giant about to see a major inflection point in growth as Cupertino is set to finally unveil its AI strategy at WWDC in June,” the 5-star analyst explained.

Ives sees this as Apple’s initial move toward building a “foundational AI consumer platform” that allows its users to integrate Google’s Gemini model within Apple’s hardware ecosystem. But this is only the beginning, as iOS 27 is expected to let Apple’s roughly 2.5 billion iOS users choose any preferred AI model as the default for Apple Intelligence features. Apple has already partnered with OpenAI to make ChatGPT available, but the full set of Apple Intelligence capabilities that users have been anticipating over the past few years will now become available.

“In our view, this will be a major step as LLM models further integrate into the Apple iOS and eventually hundreds of AI driven apps across health, fitness, finance, lifestyle, that will be created by developers around AI in the App Store taking advantage of iOS 27 and the major revamped Apple Intelligence,” Ives went on to add.

Ives reckons that roughly 20% of the global population will access AI through an Apple device over the coming years, and believes it will begin monetizing AI services and storage offerings, which could translate into an additional $15 billion in annual Services revenue.

In China, despite regulatory scrutiny in Washington, Ives expects Apple’s partnership with Alibaba on AI to become increasingly significant as the company targets its large and expanding installed base in the region.

Collectively, these developments represent “incremental steps” toward an AI-enabled iPhone, likely featuring major design changes in 2027 for the 20th anniversary model.

Separately, with new CEO John Ternus about to take hold of the reins, Ives points out he is widely respected both inside the company and across the broader tech industry, and is viewed as someone who understands the “Apple DNA” after decades at the company. Beyond considerations like supply chains, geopolitics, and branding, Ives thinks it “comes down to innovation,” and that will define both Apple’s trajectory and Ternus’s leadership. “The complexity and opportunity is Apple being at the forefront of the consumer AI Revolution…and proving to investors this is a ‘new era’ under Ternus,” Ives summed up. “It all starts at WWDC in June handing the baton from Cook to Ternus.”

For Ives, the AI opportunity merits a new price target, and a Street-high one at that. Ives’ target goes to $400 (up from $350), implying the shares will gain 39% in the months ahead. It hardly needs adding, but Ives’ rating stays an Outperform (i.e., Buy). (To watch Ives’ track record, click here)

Elsewhere on the Street, the stock claims an additional 16 Buys and 10 Holds, for a Moderate Buy consensus view. The forecast calls for 12-month returns of 9.5%, given the average price target clocks in at $314.78. (See Apple stock forecast)

Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.