In a recent research note, Wedbush highlighted positive signs of stabilization in Apple's iPhone demand, based on its Asia supply chain checks. As a result, the investment firm raised its price target for Apple's stock from $250 to $275, citing expectations for a significant upgrade cycle with the iPhone 16.

Stabilization Signals Positive Momentum

Wedbush's analysis suggests that iPhone demand is stabilizing, marking a positive shift in momentum for Apple. This stabilization is seen as a precursor to what Wedbush describes as a "monumental iPhone 16 upgrade cycle."

AI-Driven iPhone 16 Supercycle

The investment firm believes that the upcoming iPhone 16 cycle will be driven by advancements in artificial intelligence (AI) technology. Wedbush sees ample monetization opportunities arising from the integration of AI into the Apple ecosystem, both in terms of services and hardware.

Growth Opportunities in Services

Wedbush predicts that the introduction of AI technology into the Apple ecosystem will lead to significant growth opportunities in services. The firm estimates that AI-driven initiatives could add $30 to $40 per share to Apple's growth story, leveraging the sizable installed base of 2.2 billion iOS devices.

Positive Supply Chain Performance

Wedbush's supply chain checks in Taiwan indicate that April results for the Apple supply chain exceeded historical linearity by 2%. This outperformance may have been influenced by inventory build-up ahead of holidays in China. Additionally, expectations for healthy handset builds in the June quarter contribute to the positive outlook.

Anticipated AI App Store

Looking ahead, Wedbush anticipates that Apple will lay the foundation for an AI App Store, allowing developers to build consumer apps on the AI stack expected to be introduced at the WWDC event in June. This initiative is expected to drive additional growth in Apple's services segment over the coming years.

Wedbush's optimistic outlook for Apple underscores the company's potential to leverage AI technology to drive growth and innovation across its product ecosystem. With signs of iPhone stabilization and anticipation for the iPhone 16 upgrade cycle, investors are watching closely as Apple continues to navigate the evolving landscape of technology and consumer demand.