Apple shares edged higher on Friday, positioning the tech giant to potentially surpass Nvidia as the world’s second most-valuable stock. This comes after a prominent Wall Street analyst highlighted the significant impact of Apple’s recent foray into AI technologies.
With a market value of $3.22 trillion, Apple (AAPL) has reached a series of record highs in recent weeks. The company showcased its AI ambitions at a high-profile event in Cupertino, California earlier this month. The unveiling featured an enhanced Siri digital assistant and introduced “Apple Intelligence,” a suite of new AI-powered features for iPhones, iMacs, and iPads.
Apple’s AI strategy aims to seamlessly integrate capabilities such as summarization, text generation, photo editing, and advanced search within its existing ecosystem, providing a more intuitive user experience.
Analysts believe this integration is Apple’s quickest route to mainstream adoption of AI technology at the consumer level.
“Apple has the advantage of consumer trust and comprehensive user data, allowing it to offer deeply integrated AI functionalities in a way that standalone applications, PCs, and Android devices may struggle to match,” noted D.A. Davidson analyst Gil Luria in a client briefing.
Investors are now speculating on how Apple will monetize its AI initiatives and justify the necessary capital expenditure in the coming months.
Apple’s Path to AI Profitability
Toni Sacconaghi, an analyst at Bernstein SocGen Group, raised his Apple price target by $45 to $240 per share on Friday. He believes the launch of the iPhone 16 will be crucial for establishing Apple’s leadership in AI within the consumer market.
“Investors are increasingly confident that Apple can emerge as a leader in AI, rather than lagging behind,” Sacconaghi said, maintaining a ‘buy’ rating on the stock.
Sacconaghi outlines four avenues for Apple to monetize its AI strategy: accelerating iPhone replacement and boosting hardware sales through on-device AI technologies, generating revenue from AI-driven search, earning commissions from application developers, and increasing App Store spending.
However, Sacconaghi also noted that Apple’s delay in articulating its AI plans and restricting new features to recent iPhone models might slow down the monetization process.
