HomeBusinessIs Apple Stock Going to $240? 1 Wall Street analyst thinks...

Is Apple Stock Going to $240? 1 Wall Street analyst thinks so.

Apple (NASDAQ: AAPL) stocks have finally joined the artificial intelligence (AI) race.

The iEverything giant announced a partnership with OpenAI earlier this month and said it will integrate ChatGPT’s artificial intelligence into future high-end models of its iPhones, iPads and Mac computers. The stock is already up about 9% in response to the news, and according to asset management firm Bernstein, Apple could be worth even more.

On Friday, Bernstein raised his price target for Apple stock to $240 per share, implying a 15% upside over the next 12 months.

Table of Contents

Are Apple shares a buy?

Bernstein sees four ways Apple could benefit from the AI ​​megatrend:

  1. Since older iPhones can’t run AI on the device, people will have to buy newer, more expensive Apple devices. For every 1% acceleration in the upgrade cycle, Bernstein estimates that Apple’s revenue will grow by 1.8%.

  2. Apple should be able to increase high-margin ad revenue from AI search on these new iPhones.

  3. AI apps downloaded on these new iPhones will drive high-margin app sales.

  4. Because Apple acts as a gatekeeper for these apps, the company will generate commission income from e-commerce with these apps.

See also  Chewy Stock on Track for Highest Closing Price of 2024

So far, so good. But here’s where Bernstein’s Apple logic gets strange.

Bernstein raised his price target by $45 to a new target of $240 and continues to recommend buying Apple at $209 per share. Granted, Bernstein’s old target was only $195, so that’s true had to raise its price target slightly to justify recommending the stock. But Bernstein admits that even at its current share price of $209, Apple shares are already “no longer cheap.”

And Bernstein is right. Apple shares already cost more than 32.5 times earnings, and also 32.5 times free cash flow. But most analysts expect earnings growth to be slower than 12% per year over the next five years, even with the boost from “Apple Intelligence” – assuming that boost even materializes.

Bernstein is right when he says that Apple shares are expensive. It’s wrong to tell investors at this point to buy Apple stock.

Should You Invest $1,000 in Apple Right Now?

Before you buy shares in Apple, consider this:

See also  Where will Chipotle Mexican Grill be in 5 years?

The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Apple wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.

Think about when Nvidia created this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $775,568!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates, and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.

View the 10 stocks »

*Stock Advisor returns June 10, 2024

Rich Smith has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Apple. The Motley Fool has a disclosure policy.

Is Apple Stock Going to $240? 1 Wall Street analyst thinks so. was originally published by The Motley Fool

See also  Double-digit growth not going away anytime soon
- Advertisement -
RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments