Something of a rom-com developed around Apple (NASDAQ: AAPL) in September, with the big ‘will they won’t they’ question arising about whether the new iPhone will yield higher returns for investors.
Though initial reports have temporarily dampened bullish hopes, one Wall Street expert, Wedbush’s Dan Ives, has not lost faith in a happy ending, based on his comments in an interview on September 23.
According to Ives’ analysis, the new iPhone and Apple Intelligence – Apple’s integration of artificial intelligence (AI) technology – will kickstart a new technology supercycle and enable AAPL stock to skyrocket.
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Apple set to grow another $600 billion in the coming 12 months
The technology giant is set to gain nearly $600 billion in market capitalization before the end of 2025 and see its valuation skyrocket to at least $5 billion, per the analyst’s estimates.
Given that Apple has recently regained the top spot as the world’s largest company, such an increase before the end of next year does not appear unlikely.
In fact, the forecast can even be seen as somewhat conservative, given that the blue-chip behemoth ended 2023 with a valuation of $2.994 trillion and had risen to $3.443 trillion by press time on September 24, despite its at times lackluster 2024 performance.
Why there is doubt iPhone 16 will help Apple stock grow
Though Ives and several other market experts have been confident in the positive impact iPhone 16 and Apple Intelligence will have in the stock market, investors’ faith was shaken somewhat earlier in September when an analysis of pre-orders for the new smartphone was published.
The figures proved weak enough that AAPL shares suffered a 2.5% decline already in the pre-market of September 16 and remain, even after the more recent strong recovery, a mere 0.31% in the green in the 30-day chart.
Additionally, several prominent companies have also revised their outlook for Apple in the wake of the pre-purchase report.
Notably, Morgan Stanley (NYSE: MS) forecasted a short term drop to $200 – 12.25% below Apple price today of $227.92 – on September 18, primarily citing the iPhone 16 disappointment.
Why Apple stock is likely to rally before the end of 2024
Still, as Dan Ives pointed out, the iPhone 16 is already approximately 10 million units ahead of the iPhone 15, with numbers in Asia being particularly promising, indicating strong performance ahead.
He also added that there is significant room for more orders from existing iPhone users, with approximately 300 million not upgrading their smartphones in at least four years.
Finally, Ives cited the upcoming rollout of AI features, set to continue into the holiday season, as another catalyst that is likely to accelerate sales in the coming months.
Such a pattern would not be out of line with AAPL stock’s historical performance, where early numbers send the shares lower before a strong rally takes effect.
Could Apple Intelligence be a dud?
Still, there may be a counterpoint to the bull case precisely in the 300 million unupgraded phones as it could indicate either that the long-standing criticism that differences between iPhone models are insufficient to justify a new purchase or that the multiple years of high inflation have eroded people’s willingness to splurge on consumer electronics.
The argument about the consumers’ ability to spend on new products might prove particularly compelling given the recent employment reports.
Said reports were generally positioned as concerning, though not yet frightening, and have been cited as an important reason behind the FED’s recent decision to cut interest rates.
Finally, despite the enthusiasm on the Street, there have been numerous reports and surveys indicating that AI technology is not as welcome among the general public, possibly limiting the appeal of Apple Intelligence and its ability to catalyze stock market growth.
For example, more than half of Americans are, at best, concerned about the technology, per a survey report published by Consumer Reports on July 25.
