Apple CEO Tim Cook
Investment firm JP Morgan predicts that Apple will introduce AI with the 2025 iPhone 17 Pro, and has dropped its current price target to $210 partly as a result.
JP Morgan trimmed its Apple price target from $225 to $215 in February 2024, citing declining iPhone demand in China. Part of the new drop to $210, announced in a note seen by AppleInsider, is around the best time to get back into Apple stock ahead of the expected AI iPhone.
The investment firm thinks that the addition of AI features resembles when Apple introduced 5G to the iPhone. That prompted more upgrades because of 5G’s clear speed benefits, and that drove up the share price.
Tracking that price starting with 2019 when rumors of 5G grew stronger, and on past its launch with the iPhone 12 range in 2020, the analysts say that valuation peaked in the first half of 2021. While 5G had more immediately obvious benefits than AI, the analysts predict a similar cycle.
JP Morgan says that hedge fund investors are particularly interested in the AI upgrade, but also that there is doubt over when that will actually happen. While Apple has been clear that iOS 18 will introduce AI features later in 2024, it’s only a presumption that the year’s iPhone 16 Pro will have any AI-related hardware upgrades.
“In our view, we expect the upgrade cycle to be driven by iPhone 17 [in 2025],” says the analysts’ note. Specifically, they expect to see increased RAM and Neural Processing Units in September 2025, and also “broader awareness of potential AI use cases” by then.
JP Morgan thinks it’s unlikely that Apple or smartphone rivals will introduce more than a limited AI-related hardware updates in 2024.
Alongside a lack of an AI-based iPhone 16 Pro, JP Morgan predicts lower demand for Macs and iPads, and it also questions Apple’s Services growth.
Overall, it expects a risk to Services because of ongoing regulatory issues such as those over the App Store and Apple Music. However, it believes those issues will take some time to resolve, and will “play out beyond the AI upgrade issue.”
Separately, Wedbush has maintained its $250 Apple price target, in part because of its expectation that there is pent-up demand for an AI iPhone 16 Pro.
