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JP Morgan raises Apple stock target to $245 on AI announcements

JP Morgan has raised its Apple price target

Analysts at JP Morgan say that Apple's launch of AI features will prompt users to upgrade their iPhones, and has raised the price target by $20.

JP Morgan has previously expected that Apple's AI features would eventually drive an upgrade cycle, but its analysts were previously sure this wouldn't happen until the 2025 release of the iPhone 17 range. It was convinced enough that in April 2024 it dropped the target price to $210.

Even though it has increased that price since, it has only now taken the target higher than it was during the latter part of 2023. Specifically on the strength of Apple Intelligence and its expected appeal, JP Morgan has now set its Apple target price to $245.

The analysts say they do still expect to see a peak with the launch of the iPhone 17 range, but that the upgrade cycle will now start with the iPhone 16 series in September or October 2024. Overall, JP Morgan expects Apple to sell 250 million iPhones across calendar year 2025, and 275 million the following year.

JP Morgan continues to expect significant hardware updates in the iPhone 17 range to support AI functions. Its analysts believe that AI adoption across all smartphones will help accelerate demand for an AI-based iPhone.

The analysts estimate that Apple's iPhone revenues will reach $269 billion in financial year 2026. This is 34% higher than its own $201 billion prediction for the financial year 2024.

All of which marks a significant change from recent months when the majority of analysts were predicting serious issues for Apple over its declining sales in China. JP Morgan has consistently disagreed with that assessment, instead believing that Apple would recover from its China concerns.

Part of that belief in Apple's continued success was due to its growing Services revenue. Now JP Morgan says it is only raising its Services estimates modestly.

Yet it does also believe that AI features provided by third-party developers will increase Services revenues over the next few years. Similarly, the analysts say they expect to see AI features also driving upgrades to the iPad and the Mac.

One more reason for the analysts positive projections is Apple's focus on privacy and on-device AI. They say that this is an advantage to Apple because rivals are having to rely on cloud solutions, and so are going to incur greater costs.

JP Morgan is not the only firm to see Apple as once again being a good buy for investors. Following the WWDC announcements, there was a brief drop in Apple's stock price — but that quickly reversed itself.

Over the first day after the announcements, Apple's stock price climbed out of the brief 1.9% dip, and instead surged ahead 7.26%. Its stock price that day of $206.03 was Apple's 52-week high at the time.

Apple Intelligence is coming to the iPhone with iOS 18, or at least starting with that. The updates are expected to continue into 2025.