A Wall Street analyst predicts that Apple (AAPL) stock may be re-rated when the company releases its rumored AI-enabled iPhone this fall. Despite weakening fundamentals in the near term, hedge fund investors are showing increasing interest in Apple stock, according to JPMorgan analyst Samik Chatterjee. The recent decline in Apple shares has created a more attractive valuation leading up to a potential major upgrade cycle for the iPhone.
Investors are eager to participate in the cyclical upsides associated with the AI on-device led upgrade cycle, drawing parallels to the earlier 5G-led upgrade cycle. The upcoming iPhone 16, set for release this fall, is expected to feature AI capabilities to appeal to buyers. This strategy mirrors Apple’s move to 5G technology with the iPhone 12 in late 2020.
Despite a year-to-date drop of nearly 13% in Apple stock, Chatterjee maintains an overweight rating on the stock. He has slightly reduced his price target from 215 to 210. In premarket trading, Apple stock saw a 0.5% increase to 168.68. Chatterjee anticipates a potential rerating of Apple stock well before the AI iPhone launch. He believes that the significant upgrade cycle for iPhones will likely occur with the iPhone 17 series in late 2025, with broader use cases for on-device AI.
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