On Tuesday, Apple Inc.'s stock reached a new all-time high for the first time this year, highlighting a resurgence in investor confidence. The stock surged over 6% during intraday trading, breaking the $200 mark and reaching $205.45. This increase marks a more than 20% rise from its April low, entering a technical bull market and adding over $500 billion to its market cap, bringing it back above the $3 trillion threshold. Apple's previous all-time high was set on December 14 of last year.
Despite a poor initial reaction to Monday's keynote, where the stock closed nearly 2% down-its worst WWDC day performance since 2010-Apple's stock quickly rebounded. This reversal came after the company unveiled several AI-related features at its annual Worldwide Developers Conference (WWDC) and announced a partnership with OpenAI, integrating ChatGPT with the iPhone. Many investors had feared that Apple was lagging behind other tech giants in the AI boom, but the WWDC clarified Apple's strategic direction.
D.A. Davidson analyst Gil Luria upgraded Apple's rating from neutral to buy, stating that the AI features showcased at the WWDC have sparked consumer interest in the next-generation iPhone. Luria noted that these AI functionalities might drive a much-needed iPhone upgrade cycle, serving as a growth catalyst investors have been anticipating. Apple, with its extensive consumer data and trusted brand, is well-positioned to deliver deeply integrated features that standalone chat apps, PCs, and Android devices might struggle to replicate.
Morgan Stanley analysts echoed this sentiment, describing Apple's AI capabilities as making it the "most differentiated consumer digital assistant." They believe these features will incentivize consumers to upgrade their iPhones, accelerating the device replacement cycle. While some enhancements are still required before the AI features debut in the fall, the foundation for sustained superior performance and growth is in place. Morgan Stanley remains confident in their overweight rating, a $216 price target, and a $270 bull case valuation for Apple.
Analysts at Bank of America are also optimistic, forecasting an AI-driven iPhone upgrade cycle. They maintain a buy rating on Apple, citing the company's promise of multi-year upgrade cycles, potential margin improvements, and service growth.
Evercore analysts expressed increased confidence in Apple's AI strategy after attending the WWDC, particularly because they believe it will drive users to upgrade their devices. They noted that restricting Apple Intelligence to iPhones sold in the past year further strengthens their belief that AI will kickstart an iPhone supercycle.
Apple's recent rally began with its earnings report in early May, which alleviated growth concerns and announced the largest stock buyback program in U.S. history, worth $110 billion. This earnings report contributed to Apple's stock having its best month since July 2022.
Despite hitting a new high, Apple's stock has risen just over 6% year-to-date, lagging behind the Nasdaq 100 Index's 13% gain. Other major tech companies, including Microsoft, Amazon, Alphabet, and Meta, have all seen double-digit increases, with AI-focused chipmaker Nvidia soaring over 140%, briefly surpassing Apple's market cap.
Among the "Big Seven" tech stocks, only Tesla has performed worse than Apple this year, with its shares down over 30%.
