Shares of Apple (NASDAQ:) are up more than 30% since early April, sharply outpacing Apple’s gains of just over 5%, driven by excitement around Apple Intelligence and a possible rebound in iPhone shipments in China.
According to analysts at {{0|Piper Sandler}}, this excitement is justified given AI’s potential to drive significant upgrades. Moreover, renewed growth in iPhone sales in China could provide a boost in the second half of the year.
“However, given the current valuation and increasing risk of consumer spending headwinds, we feel a lot of good news is already priced into the shares,” analysts warned in a note.
They reiterated a neutral rating on the stock, but raised the price target from $190 to $225.
Last month, the iPhone maker unveiled Apple Intelligence, the company’s personalized artificial intelligence offering. The company said Apple Intelligence will be included in the upcoming OS updates for the iPhone 15 Pro and Pro Max, due in fall 2024.
“We have been cautious about consumer use cases for AI to date,” Piper Sandler said in the note.
“From our perspective, we certainly see a scenario where Apple Intelligence drives a ‘super cycle’, but we are not yet ready to attribute a ‘super cycle’ as a base case as the recent stock price might suggest.”
Additionally, analysts also said that while some argue that an iPhone is “a must-have,” slowing consumer spending due to inflation could weaken demand and dampen excitement for Apple Intelligence during the upgrade cycle.
