In a note to investors — as noted by Business Insider — Bank of America has upgraded Apple to “Buy” and said the stock has upside potential of 23%.
The bank believes artificial intelligence (AI) technologies will drive a significant upgrade cycle for the iPhone in 2025 and 2026.
“Apple should continue to see upgrade demand from older device owners, especially as AI enabled Apps will require higher processor power,” Bank of America analyst Wasmi Mohan said.
In an October 2023 Medium post, analyst Ming-Chi Kuo saidhis latest survey indicates that Apple plans to purchase 2,000–3,000 and 18,000–20,000 units of artificial intelligence (AI) servers in 2023 and 2024, respectively.
From Kuo’s post: Apple’s AI server purchases are significantly lower in 2023 than in 2024 due to a shortage of Nvidia AI chips starting from 2Q23, compounded by Apple placing its orders later than other major customers.
However, even when the supply of Nvidia AI chips improves in 2024, Apple’s AI server purchases still lag behind its competitors. Taking Meta as an example, its AI server purchase in 2024 will be about 40,000 units. Not to mention, Meta’s AI server count before 2024 already far exceeds that of Apple.
Along the same lines, in an October 2023 “Power On” newsletter, Bloomberg’s Mark Gurman said that “one of the most intense and widespread endeavors at Apple Inc. right now is its effort to respond to the AI frenzy sweeping the technology industry.”
He said that, as noted before, the company built its own large language model called Ajax and rolled out an internal chatbot dubbed “Apple GPT” to test out the functionality. The critical next step is determining if the technology is up to snuff with the competition and how Apple will actually apply it to its products, according to Gurman.
He said that Apple’s senior vice presidents in charge of AI and software engineering, John Giannandrea and Craig Federighi, are spearheading the effort. On Cook’s team, they’re referred to as the “executive sponsors” of the generative AI push.