Apple shares edged lower in early Thursday trading but a longtime bull on the stock suggests its march to a $4 trillion valuation “is still being underestimated by” Wall Street.
Apple (AAPL) shares have risen nearly 10% over the past month, and have added more than $720 billion in market value since their early-August trough, as investors continue to bet that its Apple Intelligence will be the first significant consumer use case for artificial intelligence technologies.
The rollout of Apple Intelligence, however, will take several months and will be fully available only in certain markets, as Apple deals with language, tech and regulatory challenges.
That’s lead to some reluctance from investors to assume that Apple can monetize its AI investment over the coming year, which could also be clouded by fading smartphone demand as consumer tighten their belts in a cooling global economy.
Wedbush analyst Dan Ives, however, argues in a note published Thursday that “many bears and long time Apple naysayers that have missed the last $1 trillion-plus upward move in market cap for Apple have miscalculated three very important dynamics of the Apple story”.
“We believe Apple is on pace to reach the $4 trillion market cap threshold and be the first member of this exclusive club,” Ives said.
Apple’s new AI technology, dubbed Apple Intelligence, could trigger a major iPhone upgrade cycle over the coming years.
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Ives, who raised his price target on the stock by $25, taking it to $325 per share, says Apple has around 300 million iPhones in circulation that are prime for an upgrade to the 15 and 16 versions that carry the new Apple Intelligence features.
Apple’s ‘unmatched’ installed base
That, alongside its “unmatched” installed base of over 2 billion devices using the iOS operating system and a services business valued at $2 trillion offer a compelling case for the group’s longer-term prospects.
“Consumer AI will go through Apple’s ecosystem with over 20% of the world’s population ultimately interacting with AI on an Apple device the next few years,” Ives said. “We believe the success of iPhone 16 with a strong holiday season in tow will be the launching pad for a renaissance of growth in Cupertino over the next 12 to 18 months that kicks off in this December quarter.”
Related: Analysts revisit Apple stock price targets after earnings, iPhone 16 outlook
Finance chief Luca Maestri said current-quarter sales, a key metric for investors, would likely rise by low- to mid-single digits percent from last year’s $119.58 billion, a forecast which, at the time, disappointed Wall Street analysts who were looking for an early indication that Apple Intelligence was sparking demand for the newly released iPhone.
AI-driven upgrade cycle
Ives, however, sees Apple shifting “north of 240 million iPhone units” over the group’s current fiscal year, which began in October.
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“As this AI-driven upgrade cycle takes hold this will be the highest iPhone unit sales year in Apple’s history,” Ives said. “We believe there are 100 million Chinese iPhones in the window of an upgrade opportunity alone for 2025.”
Apple shares were marked 0.19% lower in premarket trading to indicate an opening bell price of $257.70 each, a level that would peg the stock’s market value at just under $3.9 trillion.
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