AAPL surged by 3.10%, showcasing robust relative strength after Bernstein’s upgrade, which highlights “Replacement cycle tailwinds & incremental next-gen AI features setting up Apple favorably for iPhone 16 cycles.” Additionally, reports indicate AAPL is deepening discussions with OpenAI to incorporate its technology for upcoming iPhone features this year.
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Bernstein has upgraded Apple ($AAPL) from “Market Perform” to “Outperform,” setting a price target of $195.
The upgrade stems from Bernstein’s belief that current weakness in China for Apple is more cyclical and structural. They note that Apple’s China business historically exhibits higher volatility due to a feature-sensitive installed base.
Bernstein anticipates strong tailwinds from replacement cycles and incremental generative AI features, positioning Apple for a robust iPhone 16 cycle. They forecast a 10% year-over-year growth in iPhone unit sales to 248 million for 2025.
Heading into Q2 results, Bernstein acknowledges low expectations for Apple, forecasting a revenue of $80 billion for FY Q3, below the consensus estimate of $83.4 billion.
Despite the tempered expectations, Bernstein sees Apple’s guidance as a potential catalyst for the stock, reminiscent of similar events in 2023 and 2019.
Additionally, Bernstein notes that Apple traditionally enters a seasonally strong trading period, especially leading into the iPhone launch. Over the last 17 years, the stock has outperformed in the three months preceding the launch in 15 of those years, with an average outperformance of 1280 basis points.
