JPM: “Apple has potential for another 18% rise in 2025”

Analysts at JPMorgan changed their target price for Apple stock from $245 for December 2024 to $265 for December 2025. The new price goal suggests a possible upside of almost 18% in relation to the share price as it is now.

The action was taken in advance of Apple's impending third-quarter fiscal report quarterly report.

According to analysts, AAPL is "well positioned to drive higher confidence from the upcoming earnings print relative to the shares representing a solid "Edge AI" play heading into the upcoming fiscal years," and they anticipate that investors will start thinking beyond 2024.

JPMorgan thinks the producer of iPhones would reassure investors about the use of a more robust launchpad in FY24 for the upcoming AI replacement cycle, which is scheduled to start in earnest in fiscal 2025 and accelerate into fiscal 2026. Better-than-expected revenue drivers for the entire firm and iPhone lend credence to this.

Analysts predict Apple will exceed revenue targets, boosting profits per share (EPS) and probably resulting in changes to the consensus estimate for full-year earnings. Analysts said that as a result, investor concerns regarding Apple's premium valuation multiple should lessen.

Apple's stock has only outperformed the market as a whole so far this year, despite the company's impressive success during the last several months.

A higher mix of earnings from services in FY25 compared to FY21, the possibility of a higher peak iPhone volume owing to a larger installed base despite lower replacement rates, and a longer cycle driven by advancements in Edge AI capabilities that could increase replacement rates beyond the initial adoption period are the main reasons for their expectations of a higher peak multiple in the AI replacement cycle compared to 5G.

(Sources: investing.com, reuters.com)