Will Apple Stock Reach $273? Insights from Wall Street

Investors are increasingly viewing Apple Intelligence as a crucial factor for the company's growth in the next few years.

Even with steady iPhone sales in the first half of the year, shares of Apple (AAPL -0.13%) have risen by 22.6% year to date, slightly outperforming the S&P 500 index. This growth suggests that investors are optimistic about Apple's future as the tech giant prepares to launch the highly anticipated Apple Intelligence update for U.S. customers this fall.

According to Morgan Stanley analyst Erik Woodring, there are further encouraging signals for Apple stock, as he recently kept his investment firm's overweight (buy) rating on the shares with a target price of $273. The major question is whether Apple can deliver better-than-expected performance in the upcoming quarters to see the stock climb another 16% over the next year, reaching this target.

The Factors Behind Apple's Stock Increase

Some analysts have noted positive trends in delivery timelines for the iPhone 16 recently, indicating a potentially higher demand for the product. However, these trends do not point toward a significant upswing for Wall Street's short-term revenue forecasts. The overall consensus on Wall Street anticipates that Apple's fiscal Q4 2024 revenue will rise by 13% compared to the previous year, reaching $94 billion, followed by a stronger growth rate of 14% in fiscal Q1 2025 ending in December.

The upcoming artificial intelligence (AI) features introduced with Apple Intelligence are expected to not only boost device sales but also enhance growth in services, including App Store purchases and subscriptions. Although Apple Intelligence will be a free update, the company is likely to benefit from increased user engagement and new revenue streams leveraging this technology.

Apple's services segment has been a primary driver for the company's earnings growth, given the higher profit margins associated with app sales and subscriptions. Analysts project Apple's revenue to grow by 8% in fiscal 2025, with earnings anticipated to rise by 12%. If the company exceeds these forecasts, the potential exists for its shares to hit Morgan Stanley's target within the year.

*Disclaimer: The author has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Apple. The Motley Fool has a disclosure policy.

Apple, Investors, Growth