TSM - Apple: Upgrading To Buy On New Catalyst And Adjusted Smartphone Expectations
2024-07-01 08:25:00 ET
Summary
- We're upgrading Apple to a buy after a long, neutral stance.
- We're more positive about Apple's ability to outperform with Apple Intelligence, a catalyst for new iPhone releases.
- We also think smartphone demand bottomed and expect to see smartphone TAM expansion in 2025.
- The stock has traded in-line with the S&P 500 since our hold-rating in 2H23. We see more upside from current levels in 2025.
We're upgrading Apple Inc. ( AAPL ) to a buy after a long, neutral stance on the stock as we see more upside on two factors. First, we think the market has recognized the muted smartphone demand and intensified competition on the Chinese front, particularly after Apple's March quarter results, in which iPhone sales dropped Y/Y, causing a pullback in total sales for the quarter. Second, we think the company is better positioned to reverse its lackluster iPhone sales with Apple Intelligence integrated into iOS 18, announced at the WWDC event. Apple Intelligence is supported by the latest iPhones, specifically the iPhone 15, iPhone 15 Pro Max, and M-series iPads and Macs. We think the main attraction of Apple Intelligence is that it could incentivize an upgrade cycle despite the macro slowdown, or at least improve sales for the new line-up to beat expectations....
Apple: Upgrading To Buy On New Catalyst And Adjusted Smartphone Expectations