Apple shares powered higher in early Friday trading after a record set of quarterly earnings and an upbeat outlook for iPhone sales from the world's biggest tech company triggered a host of price-target changes from Wall Street analysts.
Apple (AAPL) posted its highest-ever revenue total for the three months ended in December, the group's fiscal first quarter, a tally of $124.3 billion, which came even as iPhone sales turned in a slightly disappointing performance.
The flagship smartphone generated revenue of $69.14 billion, a 0.8% decrease from the year-earlier period but below Wall Street forecasts and reflecting the uneven rollout of the group's Apple Intelligence AI features.
That left some investors concerned that iPhone sales could suffer over the coming months, but Apple CEO Tim Cook noted that the group saw record upgrades over the quarter, largely as a result of the Apple Intelligence rollout.
"We saw that in markets where we have rolled out Apple Intelligence, the year-over-year performance on the iPhone 16 family was stronger than those where Apple Intelligence was not available," Cook told investors on a conference call late Thursday.
"Apple Intelligence opens up an exciting new frontier and is already elevating experiences across iPhone, iPad and Mac," Cook added. "We're going to keep investing in innovation and in transformative tools that help users in their everyday lives."
Apple also posted a record bottom line of $2.40 a share, a 10% increase from the prior-year period, with net income also at an all-time peak of $36.3 billion.
Finance chief Kevan Parekh, meanwhile, said Apple's current-quarter revenue would likely rise in the low- to mid-single-digits percent compared from last year, a gain that likely translates to between $91.7 billion and $95.3 billion, largely in line with Wall Street's estimates.
Apple Intelligence starting to pay off
"Apple Intelligence is clearly benefiting iPhone growth in regions/countries where it is available," said D.A. Davidson analyst Gil Luria. "And while it is still being rolled out slower than initially anticipated, new regions will have their hands on Apple Intelligence soon, along with new features for existing users."
"And so while iPhone growth came in lower than expected, we remain optimistic on the outlook for iPhone upgrades as Apple Intelligence is proving to be a compelling reason for users to buy a new smartphone," said Luria. He lifted his price target by $30 to $290 a share following last night's update.
Citigroup analyst Atif Malik, who lifted his stock price target by $20, taking it to $275 a share, said Apple Intelligence was "demonstrating its upgrade potential."
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"While Apple is behind on AI and catching up with a staggered Apple Intelligence rollout, we believe its focus on end-to-end AI security —from silicon to private servers — is underappreciated," he said.
"Additionally, the recent DeepSeek breakthrough, offering lower cost per compute and optimized models running locally, could help accelerate AI adoption on devices."
Mac and iPad sales see solid gains
Atif Malik also said the release of the lower-priced iPhone SE4, slated for March, and the new Apple Intelligence software update in April would be likely positive catalysts for the stock.
The relatively muted Apple iPhone sales were offset by solid gains for Apple Services, which includes AppleTV, ApplePay and Apple Music. The division's revenue rose 13.9% from the year-ago period to $26.34 billion.
Mac and iPad sales, which boast new chips made in-house by Apple, also topped Wall Street forecasts, at $8.99 billion and $8.06 billion respectively.
"We believe we've got the best AI PC out there for running workloads. The silicon in the Mac is, and it has been for several years now, designed by us and really designed for these workloads," said Cook.
"And so, I don't want to project at the category level for the future, but we're incredibly pleased with both the Mac and the iPad for the quarter."
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Other price target changes include Morgan Stanley's Erik Woodring, who lifted it by $2 to $275 per share, and Jefferies analyst Edison Lee, who nudged his $1.58 higher to $202.33 per share.
KeyBanc Capital Markets analyst Brandon Nispel, however, "continues to see downside risks" to Apple shares even with the stronger-than-expected revenue gains from its services business and the upbeat outlook from Cook.
Citing "the lack of a U.S. upgrade cycle; China competition; and an unlikely inflection across all products/geographies," Nispel reiterated his underweight rating and $200 price target.
Apple's 'AI revolution'
Wedbush analyst Dan Ives, however, argued that Apple's place in the AI investment thesis will likely take longer to establish but will still be compelling given its massive installed base.
"The Nvidia AI revolution essentially happened overnight. ... Apple's AI consumer revolution will happen over the course of 12 to 18 months, and with almost 2.4 billion iOS devices, including 1.5 billion iPhones, this speaks to our firm bullish thesis," he said.
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Ives, a longtime Apple bull, held his outperform rating and $325 price target in place after last night's earnings, which he called "a clean quarter for Apple that marks the beginning of a multiyear upgrade cycle from iPhone 16 to iPhone 17."
Apple shares were last marked 1.4% higher in early Friday trading and changing hands at $240.92 each, a move that still leaves the stock in negative territory for the year.
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