What’s going on here?
Morgan Stanley raised its price target for Apple’s shares to $273 from $216 after the tech giant unveiled its new AI technology, Apple Intelligence, aimed at boosting iPhone and iPad sales.
What does this mean?
Apple Intelligence is designed to close the AI gap between Apple and competitors like Alphabet’s Google and Microsoft-backed OpenAI. This announcement drove Apple’s shares up by about 2% to $235.37, pushing its market value to roughly $3.6 trillion – making it the world’s highest. Morgan Stanley views this AI initiative as a potential game changer, possibly increasing iPhone and iPad shipments, despite current compatibility with only 8% of these devices. With Apple’s strong installed base of 1.3 billion smartphones, nearly 500 million iPhone sales could be on the horizon over the next two years – a big jump from the 45.2 million units sold last quarter. However, Apple’s market share saw a slight decline from 16.6% to 15.8%, according to IDC data.
Why should I care?
For markets: Big bets on AI.
Apple’s AI ambition is stirring the market, with shares gaining nearly 20% this year, outperforming the S&P 500 index. Morgan Stanley’s bullish stance, dubbing Apple a ‘top pick’, underscores strong market confidence. With a significant base of 1.3 billion smartphones and an anticipated 500 million iPhones to be sold over two years, Apple seems well-positioned for growth.
The bigger picture: AI and the smartphone rebound.
The global smartphone market, currently in a downturn, is eyeing a recovery led by AI-enabled devices. Analysts predict Samsung and Apple will lead this revival, leveraging AI to drive excitement and sales. Apple’s latest AI effort aligns with this trend, potentially setting the stage for broader industry innovation and competition.
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