Apple's stock inched higher on Tuesday as analysts predict AI features could drive a longer, stronger iPhone upgrade cycle.

Apple Inc. (AAPL) stock saw gains on Tuesday, rising 0.98% to $210.19 when writing, as investors responded positively to a bullish analyst report on the company’s artificial intelligence (AI) prospects.

Evercore ISI analyst Amit Daryanani raised the price target for Apple stock from $220 to $250, citing the potential for AI features to drive a longer and stronger iPhone upgrade cycle. This optimism comes as Apple continues to outperform the S&P 500 in long-term returns, with the stock up 60.79% over three years and an impressive 340.19% over five years.

AI Features Likely to Drive iPhone Sales

Daryanani’s analysis focuses on the upcoming iPhone 16 cycle and the gradual rollout of AI features. According to the analyst, Apple plans to introduce “Apple Intelligence” features exclusively to higher-end iPhone 15 Pro and upcoming iPhone 16 models.

The initial AI rollout, expected to function only in American English, will include limited features such as alert recaps, content summaries, and image generation. However, Evercore ISI believes that the full range of AI capabilities won’t be available until calendar year 2025.

The staggered introduction of AI features is expected to create a prolonged upgrade cycle, with word-of-mouth spreading steadily and convincing owners of older iPhones to upgrade over time. Evercore estimates that even a one-month reduction in the typical upgrade cycle could result in an additional $14 billion in iPhone sales.

This potential has led the firm to raise its fiscal year 2025 iPhone revenue growth estimate from 4% to 7%, with the possibility of reaching double-digit growth.

Apple’s Stock Still Has Room for Growth

The company’s financial metrics remain robust as Apple prepares to leverage AI in its product lineup. With a market capitalization of $3.234 trillion, Apple remains one of the world’s most valuable companies. The tech giant boasts a strong profit margin of 26.31% and an impressive return on equity of 147.25%.

For the trailing twelve months, Apple reported total revenue of $381.62 billion and net income available to common shareholders of $100.39 billion.

Despite trading near its average analyst target price of $208.80, Apple’s stock still has room for growth, according to some analysts. Price targets range from a low of $164.00 to a high of $275.00, reflecting varied opinions on the company’s future performance.

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