On January 31 (Reuters) reported that Apple shares surged over 3% in premarket trading on Friday after the company projected robust sales growth, suggesting a bounce back from a decline in iPhone sales with the rollout of artificial intelligence features.
Susannah Streeter, Head of Money and Markets at Hargreaves Lansdown, pointed out, With investors closely monitoring how AI investment will translate into tangible revenue for major tech companies, Apple's results have offered reassurance.
In contrast to tech peers like Microsoft, which have heavily invested in AI, Apple chose a more cautious approach, leveraging AI features to drive sales of its latest hardware.
This strategy paid off when China's DeepSeek unveiled free AI technology earlier in the week, triggering concerns of price competition, impacting stocks of Apple's rivals, and lifting Apple's shares marginally.
Despite a strong overall performance, the company reported a slight decline in iPhone revenue for the holiday quarter, falling short of Wall Street estimates due to a lack of AI features.
Morgan Stanley analysts anticipate that Apple Intelligence will enhance iPhone performance in regions where it's available, potentially leading to a return to iPhone growth in FY26.
While Apple is rolling out AI features, like email drafting and call transcription, it's yet to obtain approval in China for their release.
TD Cowen analysts added, China demand might recover with the introduction of AI features. Subsequent to the quarterly results, at least eight analysts raised their price targets on Apple's stock, bringing the median target to $250 based on data from LSEG.
In 2024, Apple's stock surged by 30.07%, while Microsoft and Meta saw increases of 12.09% and 65.42%, respectively.
Apple's 12-month forward price-to-earnings ratio stands at 31.12, surpassing Microsoft's 29.2 and Meta's 26.7.