Shares of Apple (AAPL 0.96%) turned sharply higher on Wednesday, continuing Tuesday's impressive climb. The stock added as much as 5.3% in early trading. As of 1:44 p.m. ET today, the stock was still up 4.9%.
Wall Street continues to weigh in on the iPhone maker's big artificial intelligence (AI) reveal as a part of Apple's Worldwide Developers Conference (WWDC).
NASDAQ: AAPL
Key Data Points
Wall Street is decidedly bullish
Apple's announcement about its plans for generative AI has been well received by investors, driving the stock higher on Tuesday. As Wall Street continued to digest the news, analysts have been weighing in on what it means for the company and its shareholders. After several upgrades and a number of price-target increases yesterday, the bullish commentary continued today.
Bank of America analyst Wamsi Mohan joined the chorus, suggesting that Apple's installed base of more than 2.2 billion devices provides insight into future demand. The analyst suggests that the debut of Apple Intelligence -- the company's suite of AI-powered features and applications -- will be the catalyst that sparks the next big upgrade cycle.
Mohan sees the replacement cycle for Apple products shrinking as its AI-related improvements give consumers a reason to replace their existing devices. and he believes Wall Street's current outlook is far too low.
I think he is on the right track. Estimates suggest that there are roughly 1.5 billion iPhones currently in use, and about 270 million of them haven't been upgraded in four years, according to Wedbush analyst Dan Ives.
The advent of Apple Intelligence and the buildout of generative AI-powered apps will likely inspire users to upgrade to the iPhone 16, which is expected to debut in the fall. This could lead to a so-called supercycle, with many iPhone owners trading up to the newest device.
Some investors saw the economic challenges as a reason to abandon Apple stock, but the company has a long track record of defying detractors. The stock currently trades at 33 times earnings, which is a slight premium compared to a multiple of 28 for the S&P 500. But over the past decade, Apple stock has gained 823%, more than four times the 180% gains of the S&P -- which illustrates why it deserves a premium.
