Apple rises as Baird bumps price target on AI opportunity (AAPL)

apple (NASDAQ:AAPLApple shares rose on Thursday after investment firm Baird raised its price target on the tech giant, citing an opportunity to boost iPhone sales due to an artificial intelligence initiative known as Apple Intelligence.

We estimate that approximately 95% of “The iPhones globally, even with an initial focus on the U.S., will need to be upgraded at some point to benefit from Apple’s intelligence,” analyst William Bower wrote in a note to investors. “Of course, other Apple devices like Macs and iPads should also benefit.” Bower raised his price target on Apple to $240 from $200 and maintained his outperform rating on the stock.

Bauer also noted that upgrade rates at AT&T (T) and Verizon (VZ) were low, suggesting that consumers may be waiting for AI to arrive in smartphones. “With smartphone upgrade cycles stretching for years, resulting in a much older iPhone base, the more than 1 billion iPhones globally could be ripe for an upgrade,” Bauer added.

Accordingly, Bauer raised his iPhone sales estimate for fiscal 2025 by about 20 million units, and now expects iPhone revenue to reach $216.1 billion, up 9% year-over-year and beating the consensus estimate of 6% growth. For the full year, Apple is expected to generate revenue of $418.1 billion and earnings of $7.30 per share, up from previous estimates of $394.6 billion and $6.73 per share, respectively.

Apple is scheduled to report its fiscal third-quarter results after the close of trading on Aug. 1. Analysts’ consensus expects the company to report earnings of $1.33 per share on revenue of $84.12 billion.