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Apple Hits $199.87 Record, AI Hopes Drive Upgrades

Apple shares hit $199.87, adding $500 billion in market cap, driven by new AI features and OpenAI partnership.

6/11, 12:38 EDT
Apple Inc.
Amazon.com, Inc.
Alphabet Inc.
Meta Platforms, Inc.
Microsoft Corporation
NVIDIA Corporation
Tesla, Inc.
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Key Takeaway

  • Apple shares hit a new intraday record of $199.87, driven by AI-related announcements at the WWDC and a 20% surge from April lows.
  • Analysts expect Apple's new AI features to drive an iPhone upgrade cycle, with Morgan Stanley setting a $216 price target and $270 bull case valuation.
  • Despite the record share price, Apple is up only 3.7% this year, lagging behind other Big Tech stocks like Microsoft and Nvidia.

Apple Shares Hit Record High

Apple Inc. shares reached a new intraday record on Tuesday, climbing as much as 3.5% to $199.87. This marks the first time the stock has hit such heights since December. The stock has surged more than 20% from its April low, adding over $500 billion to its market capitalization and pushing it back above the $3 trillion mark. The rally follows Apple's annual Worldwide Developers Conference (WWDC), where the company unveiled several new features related to artificial intelligence (AI) and announced a partnership with OpenAI, the creator of ChatGPT.

The WWDC event was seen as a pivotal moment for Apple, crystallizing a strategy that many investors felt had been missing amid AI-fueled rallies in other Big Tech companies. "Apple has not only the consumer’s information, but also their trust, it can deliver the above deeply integrated functionality in a way that standalone chat applications, PCs, and Android devices may not be able to fully replicate," wrote D.A. Davidson analyst Gil Luria. He upgraded the stock to buy from neutral, citing the potential for a much-needed iPhone upgrade cycle driven by these new AI functions.

AI Features Unveiled

During the WWDC, Apple introduced a range of new AI features, including an overhaul of its voice assistant Siri, integration with OpenAI’s ChatGPT, writing assistance tools, and new customizable emojis. These features are pitched as AI for the average person, although users will likely need to upgrade their iPhones to access them. Analysts from Morgan Stanley believe these AI features strongly position Apple with "the most differentiated consumer digital agent" and could drive consumers to upgrade their iPhones, accelerating device replacement cycles.

"Following a WWDC that delivered on the key details we were focused on heading into the event, we have even greater conviction that Apple is on the cusp of a multi-year product refresh that underpins our OW rating, $216 price target, and $270 bull case valuation," Morgan Stanley analysts wrote in a note. Bank of America analysts also maintained their buy rating on the stock, citing the promise of a multi-year upgrade cycle, potential for gross margin upside, and services growth.

Financial Performance and Market Position

Apple's recent positive quarterly report in early May has also supported the stock. The company announced the largest stock buyback program in U.S. history at $110 billion. May was the best month for Apple shares since July 2022. Despite the record share price, Apple is only up 3.7% this year, lagging behind the Nasdaq 100 Index’s 13% gain. Other Big Tech stocks with more concrete AI exposure, such as Microsoft Corp, Amazon.com Inc., Alphabet Inc., and Meta Platforms Inc., have all posted double-digit gains. AI-focused chipmaker Nvidia Corp. has soared 146%, briefly overtaking Apple in size.

Among the so-called Magnificent Seven, only Tesla Inc. has performed worse than Apple this year, with the electric-vehicle maker dropping more than 30%. Analysts from Evercore came away from the WWDC with "increased confidence" in Apple’s AI strategy, particularly because they believe it will push users to upgrade their devices. "Restricting Apple Intelligence to iPhones sold within the last year adds to our conviction that AI can help kick off an iPhone super cycle," Evercore analysts noted.

Street Views

  • Gil Luria, D.A. Davidson (Bullish on Apple):

    "The AI functions could lead to a much-needed iPhone upgrade cycle... Apple has not only the consumer’s information, but also their trust, it can deliver the above deeply integrated functionality in a way that standalone chat applications, PCs, and Android devices may not be able to fully replicate."