Apple’s stock is poised for growth, and Morgan Stanley believes the AI space holds the key to the company’s success.
Morgan Stanley Optimistic outlook
Morgan Stanley analyst Erik Woodring is bullish on Apple (NASDAQ:AAPL) stock, likening it to a blooming flower, with the promise of continued growth. Woodring’s optimism hinges on the untapped potential within the field of artificial intelligence (AI), an enthusiasm shared by both investors and industry experts.
Woodring points to the emergence of “Edge AI” as a game-changing opportunity for Apple devices. While concerns about near-term product demand and mixed supply chain checks cast shadows on Apple’s performance early in the year, Woodring sees a different picture.
Contrary view on iPhone sales
Contrary to worries, Woodring notes that December iPhone sales exceeded expectations, likely surpassing his estimate of 72.5 million units shipped. Additionally, he highlights that services revenues are on track for 10% year-over-year growth in Q4.
Woodring advises long-term investors not to fixate on short-term sales figures, emphasizing Apple’s underappreciated potential in the AI space. The tech giant’s “GenAI efforts” to embed AI capabilities directly into iPhones are gaining momentum.
The AI iPhone revolution
According to Woodring’s analysis, Apple may introduce an “AI iPhone” as early as Fall 2024. This device would leverage NAND flash memory to power extensive language models directly on iPhones. The result? AI-driven responses that are 20x to 25x faster. Siri, Apple’s virtual assistant, stands to benefit significantly from this technological leap.
The potential launch of an AI-enabled iPhone could trigger a change in consumer behavior. Instead of holding onto their iPhones for extended periods, consumers may be compelled to upgrade sooner. This could lead to a surge in demand for the latest AI-equipped iPhones, potentially boosting Apple’s revenue.
With this promising outlook, Woodring recommends investors buy Apple shares now, positioning themselves for potential gains when the AI iPhone revolutionizes the market. His price target of $220 implies an 18% upside potential within the next 12 months.
Analyst consensus
Analysts covering AAPL largely concur with Woodring’s optimism. Among the 33 analysts providing coverage, 23 advocate buying the stock, while 9 suggest holding, and only 1 recommends selling. This consensus results in a “Moderate Buy” rating.
As of now, Apple’s stock is trading at $185.92. The average price target among analysts is $203.35, indicating an approximate 8% upside potential from the current levels.
In the world of tech investments, Apple continues to stand out as a company with immense potential. Morgan Stanley’s Erik Woodring believes that Apple’s growth is far from over, and the company’s foray into the AI space could be a game-changer. With the prospect of an AI-enabled iPhone on the horizon, investors have a reason to be excited.
While the near-term outlook may appear mixed, it’s essential to remember that Apple has a history of innovation and a dedicated customer base. As the AI revolution unfolds, the tech giant’s ability to adapt and capitalize on emerging trends could propel its stock to new heights.
Investors are advised to consider their own investment goals and risk tolerance before making any decisions. Apple’s stock, like any investment, carries both potential rewards and risks. It remains to be seen whether the AI iPhone will be the catalyst that Erik Woodring (from Morgan Stanley) and many others anticipate, but it certainly adds a compelling dimension to Apple’s growth story.
