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Apple shares edged higher in early Thursday trading as a longtime bull on the stock suggests its march to a $4 trillion valuation "is still being underestimated by" Wall Street.
Apple (AAPL) shares have risen nearly 10% over the past month and have added more than $720 billion in market value since their early-August trough, as investors continue to bet that its Apple Intelligence will be the first significant consumer use case for artificial intelligence technologies.
However, the rollout of Apple Intelligence will take several months and will be fully available only in certain markets as Apple addresses language, tech, and regulatory challenges.
That's led to investors' reluctance to assume that Apple can monetize its AI investment over the coming year. That outlook could also be clouded by fading smartphone demand as consumers tighten their belts in a cooling global economy.
Ives, who raised his price target on the stock by $25 to $325 a share, says that around 300 million iPhones in circulation are prime for an upgrade to the 15 and 16 versions, which carry the Apple Intelligence features.
Apple's 'unmatched' installed base: analyst Ives
That, alongside its "unmatched" installed base of more than 2 billion devices using the iOS operating system and a services business valued at $2 trillion, offers a compelling case for the group's longer-term prospects.
"Consumer AI will go through Apple's ecosystem with over 20% of the world's population ultimately interacting with AI on an Apple device the next few years," Ives said.
"We believe the success of iPhone 16 with a strong holiday season in tow will be the launching pad for a renaissance of growth in Cupertino over the next 12 to 18 months that kicks off in this December quarter."
Related: Analysts revisit Apple stock price targets after earnings, iPhone 16 outlook
Finance chief Luca Maestri said current-quarter sales, a key metric for investors, would likely rise by low- to mid-single digits percent from last year's $119.58 billion.
That forecast disappointed Wall Street analysts, who were looking for an early indication that Apple Intelligence was sparking demand for the newly released iPhone.
AI-driven upgrade cycle
Ives, however, sees Apple shifting "north of 240 million iPhone units" over the group's current fiscal year, which began in October.
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