TLDR:
• Evercore ISI analyst Amit Daryanani believes Apple’s unique hardware and software ecosystems give it an opportunity to leverage AI for consumer applications.
• AI could drive a “supercycle” for Apple as it focuses on on-device inference for large language models.
Key Elements of the Article:
Apple Inc. shares have lagged behind as investors favor companies heavily involved in artificial intelligence (AI).
Analyst believes Apple’s tight integration of hardware and software ecosystems can provide a unique AI user experience.
Apple’s upcoming AI strategy may include on-device inference for large language models which could enhance user experience on iPhones, Macs, and iPads.
Apple’s management is expected to announce an update on their buyback plans which could potentially impact the stock price positively.
Apple’s approach to capital allocation and potential use of leverage for buybacks is being closely watched.
Despite concerns about sluggish hardware growth, Apple’s acceleration in services revenue is seen as promising by the analyst.
The analyst reiterates an outperform rating and $220 price target on Apple shares, believing the sell-off is overdone and that AI and capital allocation could drive the stock higher.
Full Article:
Apple Inc. has been facing challenges in the stock market as investors shift their focus to companies leading in artificial intelligence. However, Evercore ISI analyst Amit Daryanani sees a potential turnaround for Apple based on its ability to leverage AI through its tightly linked hardware and software ecosystems. He believes that Apple’s unique position as a hardware seller provides an opportunity to bring mobile AI applications to consumers in a way that emphasizes lower latency, better security, and easier accessibility, also known as running AI on the edge.
Daryanani points out that Apple’s management has hinted at an upcoming AI announcement that could involve on-device inference for large language models, improving the user experience across Apple devices. Additionally, the analyst highlights the possibility of a “supercycle” for Apple, driven by consumer demand for more powerful devices to support AI applications.
Looking ahead, Daryanani anticipates Apple’s forthcoming capital allocation update to impact its stock price positively. He speculates on whether Apple will use leverage to continue its buyback program, given its substantial cash reserves. Despite concerns about Apple’s hardware growth, Daryanani is optimistic about the company’s services revenue growth, which he believes is not receiving enough recognition.
The analyst remains bullish on Apple, maintaining an outperform rating and a $220 price target for the company’s shares. He sees AI and capital allocation as key drivers that could potentially lift Apple’s stock price and reverse its recent decline.