Apple Inc (NASDAQ:AAPL) stock rose 5.02% (As on June 12, 11:23:14 AM UTC-4, Source: Google Finance) after D.A. Davidson analyst Gil Luria upgraded the stock to buy from neutral raising the price target to $230 from $200. The firm cited the AI capabilities unveiled at the event as leading to an iPhone upgrade cycle and resulting in their re-rating of the technology giant’s stock.
“We believe yesterday’s presentation rhymes with one of Apple’s previous milestone moments. The transition of digital music from a standalone app with questionable regulatory standing (i.e. Napster) to an experience integrated into existing consumer applications (i.e. iTunes),” said analysts at DA Davidson.
They added: “We believe the integration of summarization, enhanced search, multi-modality, text generation, and enhanced photo editing into the exiting ecosystem will drive much broader adoption of AI than we have seen to date.” The investment firm also highlighted that Apple is the first to introduce a meaningful agent capability that will allow Siri (and beyond) to execute tasks on behalf of the user.” Furthermore, analysts see Apple as uniquely positioned to offer these capabilities and believe it may be the only one capable of doing so any time soon. The analyst believes Apple has gained the trust of the consumer, which will allow it to deliver deeply integrated AI functionality in a way that standalone chat applications, PCs and Android devices “may not be able to fully replicate.” The newly introduced AI functionality will only be compatible with iPhone 15 Pro models and beyond, which creates a favorable scenario for Apple that could spark an earlier-than-expected upgrade cycle, the analyst said, adding that the last time Apple stock outperformed was the iPhone 12 cycle, which similarly introduced 5G capabilities and limited backward compatibility. DA Davidson raised its fiscal-year 2025 estimates “comfortably above consensus” on expectations for a strong iPhone upgrade cycle this year.
Moreover, Apple announced that Siri can tap into OpenAI’s ChatGPT when needed. The company said it wanted users to be able to tap into external models. The integration will come into iOS 18, iPadOS 18 and macOS Sequoia later this year. It said it will also add other third-party artificial intelligence models. Apple introduced a new form of custom emojis called Genmoji. Users can create their own emojis using Apple’s artificial intelligence for when they can’t find quite the right emoji to express what they’re trying to say.