Equities
Apple's March to $4 Trillion is Your Opportunity to Invest
Dan Ives says Apple's strategic investments in AI and expanding services business will revolutionize user experiences and drive substantial growth.
Key Takeaway
WWDC and AI a Pivotal Moment for TechApple's Worldwide Developers Conference (WWDC) has unveiled a significant shift in the company's trajectory, with artificial intelligence taking the spotlight. According to Wedbush Securities Senior Equity and Research Analyst Dan Ives, this marks a historical moment not just for Apple, but for the entire tech industry. "I believe AI adds $30 to $40 per share to the Apple story," Ives told Supernews, emphasizing the potential impact of this strategic move. Ives predicts that Apple is on the cusp of an AI-driven super cycle, with the iPhone playing a central role. He notes that out of the 1.5 billion iPhones in circulation, 270 million have not been upgraded in over four years. As Apple integrates AI capabilities into its upcoming iPhone 15 and iPhone 16 models, Ives expects a significant uptick in upgrades. "Unless you have the iPhone 15 or iPhone 16, you're not going to have access to Apple Intelligence," he explained, adding that many users currently on iPhone 12, 13, or 14 models will likely upgrade to take advantage of these new features. The Power of the Apple EcosystemOne of Apple's key strengths lies in its robust ecosystem, which boasts an impressive 99.3% user retention rate. Ives emphasized the importance of this, stating, "It ultimately becomes as important to the average person around the world as food and water." This loyalty, combined with the integration of AI, positions Apple for a "renaissance of growth," according to Ives. Despite a lukewarm initial reaction from investors, Ives believes that the market is underestimating the potential of the upcoming upgrade cycle. He sees Apple's AI push as a catalyst for growth. "I think the Street is underestimating the upgrade cycle," Ives remarked, highlighting the significance of AI in driving consumer demand. Apple's AI Acquisitions and Competitive AdvantageWhile some may perceive Apple as playing catch-up in the AI race, Ives argues that the company's vast install base and network give it a unique advantage. "When you have 2.2 billion iOS devices, you don't have to be first," he explained, emphasizing that Apple's strength lies in its ability to leverage its existing user base. Moreover, Apple has been quietly acquiring smaller AI-focused startups over the past few years, bolstering its capabilities in this domain. When asked about the timeline for the AI-driven upgrade cycle, Ives diverges from other analysts who expect a slower start. "We think the iPhone 16 is where most will ultimately upgrade," he stated, indicating that the full impact of Apple's AI integration may be felt in the near future. A Game of Thrones in the Tech WorldIves likens the current AI landscape to a "Game of Thrones" being played out across the tech industry. While competition is fierce, he believes that Apple's unique position, with its vast install base and ecosystem, sets it apart from rivals. "Apple has something others don't," Ives asserted, underlining the company's competitive edge. As Apple embarks on this AI-driven journey, the implications extend far beyond the company itself. Ives sees this as a pivotal moment for the entire tech world and Silicon Valley. With a potential $30 to $40 per share boost to Apple's valuation and a renaissance of growth on the horizon, the company appears poised to lead the charge in the AI revolution. For retail investors, the message is clear: Apple's AI ambitions present a compelling opportunity. As the company leverages its ecosystem and integrates AI capabilities into its products, the potential for growth and innovation is immense. As Ives puts it, "I believe this is the march to $4 trillion." |
