Don't Expect Apple Stock (AAPL) to Pop Until AI and Tariff Uncertainty Ease, Say Analysts
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The tech giant yesterday announced earnings per share (EPS) of $1.57, which topped consensus expectations of $1.43. Revenue in the April through June quarter came in at $94.04 billion, beating Wall Street forecasts of $89.53 billion.
The Silicon Valley-based company also reported that its iPhone sales grew 13% year-over-year during the quarter and its overall revenue grew 10%, the largest quarterly revenue growth since December 2021.
Time for AI
Krish Sankar, five-star TipRanks-rated analyst at TD Cowen, reiterated his Buy rating on the stock and kept a $275 price target. 'Revenue growth was better than feared, driven by above seasonal iPhone and Mac demand,' he said.
He said that concerns over Apple's 'incomplete AI strategy' were an ongoing overhang for the stock but that the company has around 18 months to 'rectify' this. 'The personalized Siri is still on track for a 2026 release and Apple has increased AI retail spend across research and development,' he said. ' While investors are understandably focused on Apple's lack of leadership in AI models and Agentic AI systems, the declining cost to access models can be leveraged.'.
Morgan Stanley analyst Erik Woodring raised the firm's price target on Apple to $240 from $235 and kept a Buy rating. He said Apple's report was its strongest quarterly report in over two years. Historically, he said this would be a quarter 'where bulls get louder,' but he doesn't expect Apple to 'break out until clarity emerges on tariffs and regulation.'
Srini Pajjuri, analyst at Raymond James, raised the firm's price target on Apple to $240 from $230 and kept an Outperform rating. He was encouraged by accelerating capex spend and expects Apple Intelligence, including the much-awaited Siri update, to drive a multiyear upgrade cycle.
Valuation Risk
Needham analyst Laura Martin reiterated her Hold rating. She said the impressive financial performance was overshadowed by concerns about the company's future growth prospects.
This included the anticipated delay in the integration of Apple Intelligence until after 2025 and the competitive pressure from Android's advancements.
She highlighted the risk associated with Apple's heavy reliance on the iPhone, suggesting that if Apple's iOS system lags significantly behind Android, it could pose a substantial valuation risk for the company.
Indeed, the group has struggled in comparison with its peers over the last 12 months.
Is AAPL a Good Stock to Buy Now?
On TipRanks, AAPL has a Moderate Buy consensus based on 13 Buy, 12 Hold and 1 Sell ratings. Its highest price target is $275. AAPL stock's consensus price target is $228.11, implying an 8.09% upside.
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