JPMorgan is still bullish on Apple despite regulatory issues in the EU

JPMorgan is still bullish on Apple despite the regulatory issues in the EUAsset managers are optimistic about Apple's stock performance.

In this post:

  • Apple is set to gain traction from asset managers as they become increasingly optimistic about AI growth.
  • JPMorgan’s senior analyst, Samik Chatterjee, says the iPhone maker has time to settle regulatory challenges.
  • Bernstein and Rosenblatt Securities have also increased their Apple share target price.

JPMorgan analysts remain optimistic about Apple (AAPL) stock. Apple seems ready to capitalize on the opportunity provided by the introduction of iPhones with AI features.

Hedge fund managers are taking an interest in the idea of a major upgrade to Apple’s flagship product, i.e., their iPhones. However, Apple has delayed the launch of AI-enabled iPhones in an important market. Last week, the company announced that it would postpone the introduction of AI features in the European Union (EU). 

Also read: Apple delays launch of 3 key AI features in Europe due to EU rules

Apple has taken the step due to regulations surrounding the tech industry. However, JP Morgan’s Samik Chatterjee, senior networking equipment and IT hardware analyst, has positive views on the tech giant’s performance.

Apple has time to resolve regulatory issues

Despite all the worries about EU regulations impacting Apple’s stock, Chatterjee has an overweight rating on the iPhone maker, even though the tech giant’s shares have fallen by double digits this year. 

Apple is also facing weak sales in the Chinese mainland market and an antitrust lawsuit against its services arm by the US Justice Department. Regarding the EU regulatory impact, Chatterjee says it will not have a “significant impact” on the upgrade cycle. He said,

“We expect Year 1 of an anticipated 2-year stair-step volume ramp to be relatively unaffected by the dynamics in the EU market,”

He adds further that the company has sufficient time to resolve the issues in fiscal year 2025 before the forecasts are impacted. He derives this idea from the fact that the upgrade cycle will continue until fiscal year 2026.

Another key factor that Chatterjee highlighted is that the European market, excluding the UK, only contributes 14% to total iPhone unit sales. He expects North America to be the key driver of growth for the “AI upgrade cycle,” while China will be second.

Asset managers are optimistic about AAPL

While Apple is lagging behind in artificial intelligence offerings, the firm is trying to leverage the technology by partnering with others. Apple recently partnered with OpenAI for ChatGPT integration in iOS18. It is also said to be in talks with Google to add AI features to its phones. All these prospects are also turning the sentiment positive, according to the investment bank.

In a previous report, Chatterjee noted that hedge funds are looking for the best entry point for Apple ahead of the upgrade cycle. Apple’s current AI rally has pushed the valuation to 30 times forward earnings, which is still lower than Microsoft’s forward earnings of 33 times.

Also read: Apple will not pay OpenAI for ChatGPT integration in iOS18

JPMorgan also increased its price target on Apple shares from $225 to $245 on June 18. The bank cited an increased volume forecast for iPhone 16, which will have a higher demand due to its AI features. iPhone 17 will also follow the same cycle. The bank noted that the upgrade cycle will peak with the launch of iPhone 17. 

In a report released today, Bernstein maintained its buy rating for Apple. Bernstein analyst Toni Sacconaghi set the price target for the iPhone manufacturer at $240, based on the service sector and margin growth. Rosenblatt Securities has also upgraded their Apple stock target price to $260.

Cryptopolitan reporting by Aamir Sheikh

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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