Is Apple Stock Poised to Reach $273? Insights from a Wall Street Analyst

Investors view the upcoming Apple Intelligence update as a significant driver for growth in the next few years.

Even though Apple (AAPL -0.13%) reported flat iPhone sales during the first half of the year, its stock has increased by 22.6% since the start of the year, slightly outperforming the S&P 500 index. This surge suggests that investors are optimistic about the company's growth potential, especially with the anticipated release of the Apple Intelligence update for U.S. users this fall.

Erik Woodring, an analyst from Morgan Stanley, recently weighed in on Apple’s stock forecast. He has maintained an overweight (buy) rating on the shares and set a price target of $273. With the stock already experiencing notable gains, the question remains: can Apple deliver better-than-expected results in the coming quarters to facilitate a further 16% rise in stock price to achieve this target within the next year?

Reasons Behind Apple’s Stock Increase

Some analysts have highlighted promising data regarding the delivery lead times for the iPhone 16, indicating a possible increase in demand, which could contribute to future sales growth. Currently, analysts project Apple's fiscal Q4 2024 revenue to rise 13% year over year to reach $94 billion, followed by a forecasted 14% growth in fiscal Q1 2025, concluding in December.

The introduction of new artificial intelligence (AI) features on Apple devices aims not only to boost device sales but also to enhance service revenues, such as App Store purchases and subscription services. While Apple Intelligence will be a free software update, the expected increase in user engagement could lead to higher revenue from new service offerings that leverage this technology.

Apple's services revenue has emerged as a key growth driver, particularly regarding earnings growth, due to the higher profit margins associated with app sales and subscriptions. Analysts predict that Apple's overall revenue will grow by 8% in fiscal 2025, with earnings projected to increase by 12%. If Apple manages to exceed these expectations, its stock could potentially reach Morgan Stanley's target price within a year.

Note: The author has no investment position in any of the stocks mentioned. The analyst firm has positions in and recommends Apple. Please consult the respective disclosure policies for more details.

Apple, Stock, Growth