Apple shares rose by over 3% in premarket trading on Friday following a forecast of strong sales growth, signaling a potential recovery from declining iPhone sales as the company introduced artificial intelligence features.
“With investors highly tuned into how AI spend will represent real revenue for big tech, Apple’s results have provided reassurance,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Unlike rivals such as Microsoft, which has invested billions into AI, Apple has taken a more cautious approach, integrating AI into its hardware to drive sales.
This strategy proved beneficial earlier in the week when Chinese AI startup DeepSeek launched free AI technology, triggering concerns over price wars and impacting competitors’ stocks, while giving Apple a slight boost.
Despite strong overall sales and profits, Apple’s iPhone revenue for the holiday quarter fell slightly short of Wall Street expectations, attributed to the delayed rollout of AI features. “China remains a key wildcard, but Apple Intelligence is bolstering iPhone performance in regions where available, setting up a return to iPhone growth in FY26,” analysts at Morgan Stanley noted.
Apple is gradually introducing AI-powered features such as email drafting and call transcription but has yet to secure a local partner in China to deploy them.
“China demand could recover as AI features get launched,” TD Cowen analysts added. Following the earnings report, at least eight analysts raised their price targets on Apple’s stock, bringing the median target to $250, according to LSEG data.
In 2024, Apple’s stock climbed 30.07%, while Microsoft gained 12.09% and Meta surged 65.42%. Apple’s 12-month forward price-to-earnings ratio stands at 31.12, compared to Microsoft’s 29.2 and Meta’s 26.7.
