Apple Forecasts Growth Amid AI Expansion

News Desk

Islamabad: Apple shares rose more than 3% in premarket trading on Friday after the company projected solid sales growth, signaling a recovery from a dip in iPhone sales with the introduction of new AI features.

“Investors are closely watching how AI investments will translate into real revenue for big tech, and Apple’s results have offered reassurance,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Unlike its tech peers, such as Microsoft, which have invested billions in AI, Apple has taken a more cautious approach, focusing on integrating AI to enhance the appeal of its new hardware.

This strategy paid off earlier this week when China’s DeepSeek launched free AI technology, raising concerns about price wars, which led to a dip in stocks for some of Apple’s competitors while Apple’s shares rose slightly.

Despite strong overall sales and profits, the company experienced a small decline in iPhone revenue for the holiday quarter, falling short of Wall Street estimates, primarily due to the lack of AI features.

However, analysts at Morgan Stanley noted that Apple Intelligence is improving iPhone performance in certain regions and may drive a return to growth for iPhones in fiscal year 2026. Apple is introducing AI features like email drafting and call transcription, although it has yet to secure a local partner in China for their release.

“Demand in China could recover as AI features are launched,” analysts at TD Cowen stated. Following the company’s quarterly results, at least eight analysts raised their price targets for the stock, bringing the median target to $250, according to data from LSEG.

In 2024, Apple’s stock rose by 30.07%, 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.