Following a spate of downgrades by Wall Street analysts, Apple (AAPL) stock rose Thursday as Bank of America (BAC) analyst Wamsi Mohan upgraded the bank's position on Apple and raised its price target. , received the long-awaited vote of confidence. Apple stock was up nearly 3% as of midday Thursday.
In a research note, Mohan upgraded Apple from “neutral” to “buy” and raised his price target from $208 to $225. Mohan said the company stands to benefit from a number of industry trends as well as an excess of users who are using older iPhones and will need to upgrade to newer models in the coming years.
Specifically, Mohan predicts that “iPhone's multi-year upgrade cycle will be enhanced by the need for modern hardware to enable Generative AI capabilities introduced in 2024/2025.” said. He also said he expected further growth in the company's services business and that the risks surrounding legal issues that Apple might face were “manageable.”
Apple is also preparing to launch its Vision Pro headset, its most ambitious product yet. The $3,499 Vision Pro, the company's first new product category since the launch of the Apple Watch, will be a test of Apple's ability to produce new types of devices that could become the next generation of computing.
In a recent hands-on with the Vision Pro, Engadget's Dana Wolman and Cherlynn Low praised the device's technical prowess and fun factor, but criticized its floating keyboard. I was blown away by Vision Pro when I first tested it during Apple's WWDC event in June. It's definitely the best headset, but the price is going to be prohibitive for the average consumer.
But Mohan said the Vision Pro could surpass Apple's iPad revenue once spatial computing takes hold. The company's iPad business generated $28.3 billion in 2023, while iPhone sales generated $200.6 billion.
Mohan's upgrade follows downgrades of Apple shares by Barclays, Piper Sandler and Redburn Atlantic. Analysts at the companies said the slowdown in iPhone sales, especially in China, was a major headwind for the tech giant.
Greater China is Apple's third largest region by sales after North America and Europe. In 2023, the region accounted for $72.6 billion of the company's total revenue of $383.3 billion.
China could be particularly troublesome for Apple, as the company faces increased competition from homegrown tech companies such as Huawei and Xiaomi. Huawei, in particular, managed to regain strength in the smartphone market after US sanctions nearly wiped it out.
Meanwhile, Apple's biggest smartphone rival Samsung announced its new Galaxy S24 lineup on Wednesday. The phones will go on sale on January 31st, with prices ranging from $799 for the Galaxy S24 to $1,299 for the S24 Ultra, and all come with generative AI features, including translation features and AI for photo editing. If Apple wants to compete on the same level as its Android rivals, it will need to introduce some kind of generative AI functionality to the next iPhone in September.
But for now, it's all about the iPhone 15 and Vision Pro. We'll know more about how the iPhone 15 is performing, and perhaps even get an outlook on the Vision Pro, when Apple releases its first-quarter results on February 1st.
Correction: A previous version of this article incorrectly listed Apple's previous price target. We apologize for the error.
daniel howley I'm the technology editor at Yahoo Finance. He has been covering the technology industry since his 2011. You can follow him on Twitter. @Daniel Howley.
Click here for the latest technology news impacting the stock market.
Read the latest financial and business news from Yahoo Finance