TD Cowen raises AAPL target to $250 on AI and China sales

Investment analyst firm TD Cowen predicts that Apple Intelligence will bring a modest boost to the iPhone 16 range, but be much more significant in 2025, by when China sales are expected to have returned to growth.

Ahead of Apple's latest earnings call on August 1, 2024, TD Cowen is advising investors to buy. Its analysts are again saying, though, that Apple's earnings won't materially grow until the 2025 iPhone 17 and its hardware support for AI.

Nonetheless, in a note to investors see by AppleInsider, TD Cowen has raised its Apple price target significantly. Having stayed on $220 since August 2023, the company has now raised it to $250.

TD Cowen says that this is in part because of the iPhone's strong market share in what it describes as Tier 1 and Tier 2 cities in China, especially amongst younger buyers. Based on supply chain surveys, the company is sticking to its current prediction of 215 million iPhones being made during 2024, but says there is potential for that to grow up to 230 million.

Based on data from the China Academy of Information and Communications Technology (CAICT) for May 2024, TD Cowen says sales in China rose 26% compared to the previous month. It's not clear how TD Cowen reaches this conclusion, however, when in June 2024, JP Morgan cited the same source as saying iPhone sales rose 44% from April 2024 to May 2024.

Revenue, iPhone, and Services Assumptions table shows projected units sold, revenue, and growth percentages for iPhone and services from Sep '23 to CY25, sourced from company reports by TD Cowen.

TD Cowen on iPhone sales and revenue

TD Cowen forecasts that iPhone sales for the second and third calendar quarter of 2024 will be flat year over year, because of macro economic conditions, and also loss of market share in China. That last is due to Huawei increasing its share, although TD Cowen also believes that the Chinese firm will have to delay its Mate 70 smartphone because of low 5 nanometer processor yields.

Separately, TD Cowen predicts a double-digit boost in iPad sales because of the recent launch of the new iPad Air and iPad Pro models. Its analysts think that revenues from the Mac will be flat, although they note the possibility that Apple introducing M4 Macs to support AI could drive sales.

The company also notes that changes to the App Store across Europe could have a modest impact on Apple's revenues in Services. Even so, the analysts predict what they call a healthy double-digit growth in Services overall.