Apple’s Next iPhone Spurs Fresh Optimism on Wall Street

Bank of America recently increased its price target for Apple stock to $256 per share, suggesting a nearly 12% increase from its current trading price as of 11:00 a.m. ET on Thursday.

Rumors suggest that Apple’s upcoming iPhone 16 will receive a ‘significant’ update, introducing features not seen in previous smartphones. Apple plans to release it in September with a new design and improved battery life.

This upcoming iPhone upgrade is a crucial driver for this optimistic outlook. According to the bank, excitement for generative artificial intelligence and the aging devices consumers use will spark a multi-year upgrade cycle.

iPhone 16 AI Capabilities

Other analysts also express bullish sentiment about the upcoming iPhone 16, set for release in September. It will mark Apple’s first device designed with AI capabilities in mind, featuring a revamped Siri, text summaries, and image generation.

These tools, introduced during Apple’s WWDC event, will be part of the iOS 18 release. The AI system, known as “Apple Intelligence,” will be available only on Apple models 15 and newer.

Additionally, it is rumored that the iPhone 16 will also get a design upgrade to its titanium frame, bringing back a more sophisticated. This comes after iPhone 15 Pro users complained that it would temporarily change color when it came into contact with the natural oil from human skin.

Pent-Up Demand and Market Dynamics

“Post-WWDC, the percentage of respondents expressing their intention to upgrade their smartphone in 2024 increased, which we view as bullish,” Bank of America stated on Thursday, referencing a survey it conducted. The bank added, “In our view, this survey result signals higher confidence in users’ purchasing decisions, which the introduction of Apple Intelligence could drive.”

In a note on Thursday, Wedbush Securities estimated that shipments of the new iPhone would approach 90 million, surpassing Wall Street’s expectations. The firm has set a price target of $275 for Apple stock.

The features of the iPhone 16 aren’t the only catalysts — there’s also significant pent-up demand for a new model. Wedbush estimates that 270 million iPhone users have not upgraded their devices in four years.

Bank of America concurred, noting in its survey that a large percentage of users were still using older models and observed an increase in consumers willing to upgrade more frequently. Apple’s preference has risen above other smartphone brands.

Additionally, concerns about a potential Chinese consumer pullback, a significant worry for investors last year, are fading. Moreover, demand for Apple products remains strong in China.

In China, while there was a temporary decline in respondents’ interest in upgrading to an iPhone (and a corresponding increase in preference for Huawei) for the periods of September-October 2023 and March-April 2024, Apple quickly regained market share in both instances.

Bank of America