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Investing.com - Apple's upcoming release of its next-generation cut-price SE4 iPhone in March and an impending software update to its artificial intelligence service in April could be "positive catalysts" for shares in the tech giant, according to analysts at Citi.
Apple (NASDAQ:AAPL) has guided for stronger sales of its latest iPhone 16 offering thanks in part to its AI enhancements, known as Apple Intelligence, and believes there is still room left for innovation in the handset, the analysts said.
In a note saying they see "upside" to the stock within the next 90 days, the analysts led by Atif Malik added that the recent emergence of a low-cost AI model from Chinese start-up DeepSeek could help increase adoption of AI on Apple's devices as well.
Shares in Apple were higher in premarket trading on Friday, rebounding from an initial dip following the iPhone maker's latest quarterly results.
Executives at the company said the group now expects sales to grow in the low- to mid-single digits in its fiscal second quarter. The guidance surpassed expectations and pointed to momentum in demand for the iPhone, Reuters reported, citing analysts.
The rosier outlook helped to assuage some worries around sales of Apple's flagship smartphone, which dropped marginally and missed estimates in the key holiday shopping quarter, due in part to Apple Intelligence not being available in some markets. Still, CEO Tim Cook said Apple's AI features are boosting sales.
Apple has taken a more cautious approach to AI compared to its Silicon Valley peers, choosing not to spend heavily on building out data centers. The strategy seemed to help insulate the stock from a DeepSeek-inspired roiling of stock markets earlier this week, which led to steep drops in other Big Tech shares.
For the three months ended December 28, Apple reported earnings of $2.42 per share on revenue of $124.3 billion. Analysts polled by Investing.com had anticipated per-share income of $2.36 on revenue of $124.12 billion.
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