Bank of America is bullish on Apple stock for 2024, projecting a potential surge of 36% from its Friday closing price. The bank cited four upcoming catalysts for the tech giant, including the launch of an AI-enabled iPhone 16.
Despite acknowledging a weak demand environment, Bank of America believes that much of this weakness is already factored into Apple's stock, which has seen a 14% decline year-to-date. Analyst Wasmi Mohan reiterated the bank's "Buy" rating and set a price target of $225 for Apple.
Mohan outlined four key catalysts expected to drive Apple's performance in the coming months. Firstly, during the company's fiscal second-quarter earnings call, Mohan anticipates an increase in capital return to shareholders, potentially through a higher dividend payout and expanded stock buyback program.
Secondly, Mohan expects significant AI-related announcements at Apple's WWDC conference in June, which could generate excitement among investors. Apple has been relatively quiet on its AI capabilities compared to its peers, and Mohan sees this as an opportunity for the company to showcase its advancements.
Thirdly, Apple's launch of an AI-enabled iPhone 16 later this year is anticipated to enhance the company's earnings power, particularly with on-device generative AI capabilities. Mohan highlighted that all four new iPhone models could feature the same application processor, facilitating improved AI and machine learning performance.
Lastly, Mohan emphasized the potential for profit margin expansion as Apple develops chips in-house, reducing component costs, and reduces reliance on public cloud providers
Additionally, Apple's Services business is expected to drive strong revenue growth, fueled by offerings such as the App Store, iCloud, and subscription services like Apple TV+ and Apple Music.
Looking ahead to Apple's earnings, Bank of America anticipates the company to surpass Wall Street's estimates, with expectations of $1 billion in revenue from sales of its Vision Pro during the upcoming earnings call.
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