HSBC upgraded Apple's stock from 'Hold' to 'Buy' and set a price target of $366, indicating a potential 10% upside from Thursday's closing price. This upgrade contributed to Apple shares rising 1.8% on Thursday, reaching a fresh record high. The bank's positive outlook is driven by Apple's agentic AI strategy and a robust hardware pipeline. Other analysts, however, are more divided, with 28 out of 47 rating the stock 'Buy' or higher, 16 'Hold,' and three 'Sell' or lower, with an average price target of $315.79, which is over 5% below current levels.
Apple's stock has performed exceptionally well in July, climbing 15.2% and positioning it for its best month in four years, making it the second-best performer among the Magnificent Seven. This outperformance is notable given the tech-heavy Invesco QQQ Trust Series 1 (QQQ) dropped nearly 5% this month due to a chip stock selloff. Fueling this positive sentiment are Apple's recent price increases across its MacBook, iPad, HomePod, and Apple TV lineups, with potential iPhone price hikes on the horizon. Investors are also closely monitoring the leadership transition, as John Ternus is set to take over as CEO from Tim Cook on September 1.
Adding to the strategic moves, Apple is reportedly exploring buyouts of chip startups to enhance its efforts in developing server processors for AI. This aligns with the company's broader AI strategy, where it is avoiding deep infrastructure spending, instead focusing on integrating AI into its devices. Agentic AI, which allows Siri to perform complex tasks like booking reservations or managing schedules, could drive the largest hardware refresh cycle in Apple's history, as an estimated 1.3 billion active iPhones may not support the next-generation Siri. This focus on agentic AI could lead to new revenue streams through premium AI subscriptions, transaction fees, and partnerships with AI providers.
HSBC's upgrade follows other positive analyst actions, such as Citi hiking its price target by $50 to $365 and BNP Paribas upgrading Apple to outperform due to its ability to absorb rising memory chip prices and potentially gain smartphone market share. Despite previous concerns over product price increases and a post-WWDC sell-off, analysts like Gene Munster and Ming-Chi Kuo have highlighted Apple's strong AI progress and market outperformance. The release of public betas for iOS 27 and other operating systems, featuring advanced AI capabilities for newer hardware, has also bolstered investor confidence, with China's cyberspace regulator approving Apple Intelligence for the Chinese market using models from Baidu and Alibaba.
