Apple rises as Baird bumps price target on AI opportunity

Apple (NASDAQ:AAPL) shares rose on Thursday as investment firm Baird raised its price target on the tech giant, citing its opportunity to boost iPhone sales due to its artificial intelligence initiative, known as Apple Intelligence.

"We estimate that close to 95% of iPhones globally, even with the initial focus on the U.S., will need to upgrade at some point to take advantage of Apple Intelligence," analyst William Power wrote in an investor note. "Of course, other Apple devices like Macs and iPads, should also benefit." Power raised his price target on Apple to $240 from $200 and kept his Outperform rating on the stock.

Power also noted that upgrade rates at AT&T (T) and Verizon (VZ) have been low, suggesting consumers may be waiting for AI to come to smartphones. "With smartphone upgrade cycles lengthening for years, resulting in a much older iPhone base, the 1 billion + iPhones globally could be primed for an upgrade catalyst," Power added.

As such, Power raised his fiscal 2025 iPhone estimates by roughly 20M units and now expects iPhone revenue to be $216.1B, up 9% year-over-year, above the consensus estimate of 6% growth. For the full-year, Apple is expected to generate $418.1B in revenue and earnings of $7.30 per share, up from previous estimates of $394.6B and $6.73 per share, respectively.

Apple is set to report fiscal third-quarter results after the close of trading on August 1. A consensus of analysts expect the company will earn $1.33 per share on $84.12B in revenue.