Investment bank JPMorgan on Wednesday put Apple stock on its "positive catalyst watch" ahead of the consumer electronics giant's June-quarter earnings report.
Apple plans to announce its fiscal third-quarter results after the market close on Aug. 1.
JPMorgan analyst Samik Chatterjee reiterated his overweight, or buy, rating on Apple stock and upped his price target to 265 from 245. He put Apple on a positive catalyst watch because he believes the company's fiscal Q3 report will set the stage for a hardware upgrade cycle fueled by artificial intelligence capabilities.
On the stock market today, Apple stock dropped 2.9% to 218.54, amid a broad sell-off in tech stocks.
Investor focus is likely to pivot to looking beyond calendar 2024 starting with the fiscal Q3 report, Chatterjee said. Apple's September quarter will be a "launchpad" for the company's AI-enabled hardware, starting with the iPhone 16 series.
"Apple (is) well positioned to drive higher confidence from the upcoming earnings print relative to the shares representing a solid 'edge AI' play heading into the upcoming fiscal years," he said in a client note.
AI Upgrades Priced Into Apple Stock?
Despite concerns that the AI opportunity is already priced into Apple stock, Chatterjee sees upside for shares. Underappreciated factors include profit margin improvement and higher unit volumes with the next-generation iPhones.
Elsewhere on Wall Street on Wednesday, Barclays analyst Tim Long raised his price target on Apple stock to 187 from 164 but kept his underweight, or sell, rating. Long thinks Apple stock is overvalued at current levels. In a client note, he also expressed skepticism about the AI-based upgrade cycle.
"We believe the stock has already run in anticipation of iPhones bottoming and the upcoming ramp of AI features," Long said in a client note. "While an upward EPS (earnings per share) revision may help shares in the near term, at a multiple of over 30x 2025 EPS, we see less scope for upside at these levels. We do not think the iPhone 16/AI features will be enough to drive a meaningful enough upgrade cycle to justify the valuation."
Apple Is A Recent Breakout
Apple stock is on the IBD Tech Leaders list. Plus, it is one of the Magnificent Seven stocks. Apple also is the world's most valuable company, with a market cap of $3.35 trillion.
Apple stock has an IBD Composite Rating of 84 out of 99, according to IBD Stock Checkup. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
On June 11, Apple stock broke out of a cup base at a buy point of 199.62, according to IBD MarketSurge charts. It notched a record high of 237.23 on July 15 before pulling back.
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