Apple stock owners probably just saw their Christmas gift.
On Dec. 23 Apple ( AAPL ) jumped to a record $255.65 after the opening bell.
After hitting that milestone, Apple stock closed at $255.27. The stock is up 32.6% year-to-date, outperforming the S&P 500 and the Nasdaq Composite indexes.
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Earlier this month, Apple rolled out iOS 18.2, a major software update featuring advanced AI capabilities, including customizable emojis and integrated ChatGPT support within Siri and Writing Tools.
Apple hopes its new artificial intelligence technology, Apple Intelligence, will spur a wave of handset upgrades. The features are available only on the iPhone 16 and last year's iPhone 15 Pro.
Apple analyst sees strong holiday season, fueled by AI update
In a Wedbush research note on Dec. 22, analyst Daniel Ives said that demand for the iPhone 16 since its September launch is slightly ahead to generally in line with expectations and that "Apple is set to have a strong holiday season ahead as iPhone 16 upgrades across its installed base are trending well into Christmas."
"Importantly, Apple Intelligence has not rolled out in China or many other countries, with April the likely timetable for these AI launches along with a Chinese tech partner also named very soon to catalyze the timing of this rollout in this key region," the analyst said.
Wedbush maintained an outperform rating and a $300 price target for Apple stock.
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Last week, Reuters reported that Apple was discussing with Chinese tech giants Tencent ( TCEHY ) and ByteDance to integrate their AI models into iPhones sold in China.
Wedbush says Apple bears have underestimated three key factors: its unmatched base of 2 billion iOS devices, including roughly 300 million iPhones not upgraded yet; a $2 trillion services business monetizing its vast customer base; and Apple's dominant role in consumer AI, with 20% of the global population expected to engage with AI on Apple devices.
"This will be a multiyear AI journey that will define the future for Apple with its next generation chip architecture, hardware releases, and future iPhone models built around the AI foundation that many consumers will ultimately embrace."
Apple at $4 trillion market cap in early '25: Wedbush
Apple stepped out of its recent iPhone sales slump during the summer quarter.
iPhone sales reached $46.22 billion in the three months ended Sept. 28, marking a 6% increase from the year-earlier period, according to Apple's fiscal Q4 report released in late October.
This growth ended a streak of two consecutive quarters of year-over-year declines in iPhone sales.
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Apple CEO Tim Cook said sales of the iPhone 15 were “stronger than 14 in the year-ago quarter, and 16 was stronger than 15,” CNBC reported.
"Apple could sell north of 240 million iPhone units in FY25 as this AI-driven upgrade cycle takes hold and this will be the highest iPhone unit sales year in Apple's history," Wedbush said.
The iPhone remains Apple’s largest revenue generator, making up roughly 48.7% of the company’s total sales in the most recent quarter.
Wedbush says Apple will reach a $4 trillion market cap in early 2025, "the first member of this exclusive club," the analyst said.
As of Dec. 23's close Apple's market cap was roughly $3.86 trillion, surpassing Nvidia's $3.42 trillion and Microsoft's $3.32 trillion.
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The iPhone maker reported fiscal Q4 adjusted earnings per share of $1.64, above Wall Street's $1.60 forecast. Revenue came in at $94.93 billion, up 6% and exceeding the $94.58 billion consensus estimate.
In its latest earnings call, Apple said it expected “low-to-mid-single digit” percent sales growth for the December quarter.
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