JPMorgan analysts lifted their price target on Apple (NASDAQ:AAPL) shares from $225 to $245, citing further earnings per share (EPS) upside potential amid the AI-driven iPhone upgrade cycle.
“We are updating our volume forecasts for the iPhone 16 and iPhone 17 cycle following the WWDC event, which laid out a collection of AI features that in our view will drive an upgrade cycle that starts with the iPhone 16 launch, followed by a cycle peak with the launch of iPhone 17,” analysts said in a note.
As a result, the Wall Street giant has also raised their iPhone volume estimates to 250 million units in 2025 and 275 million units in 2026. It predicts a more robust year-over-year increase in both fiscal years, compared to the 5G cycle.
Factors include conservative replacement rates, a two-year ramp to peak volumes, and backward compatibility of AI features on the iPhone 15 Pro/Pro Max. Moreover, they expect significant hardware upgrades in 2026.
The analysts also raised their growth estimates for Apple’s Services segment, anticipating higher monetization through third-party AI applications in the coming years.
“The combination of the above leads us to raise our FY25E and FY26E estimates to $8.10 and $9.69, respectively, relative to consensus expectations for $7.26 and $7.64 for FY25E and FY26E, respectively,” analysts continued.
Though buy-side estimates have risen significantly following the WWDC event, which lifted investor expectations for an AI-driven upgrade cycle across native apps, there is still potential upside for Apple stock, JPMorgan notes. Currently valued at approximately 22x their FY26 estimates, the analysts believe a more appropriate valuation would be 25x.
“However, our updated model only incorporates AI-led upsides to iPhone volumes, and we envision further potential upsides in the form of upgrades to the iPad and Mac devices from AI-led capabilities,” analysts added.