Apple shares rise amid AI-driven sales growth forecast

• Published On: 02 February 2025 at 19:21

Apple shares rose more than 3% in premarket trading on Friday after a forecast of strong sales growth, indicating a possible recovery from declining iPhone sales as the company introduced artificial intelligence features.


"With investors closely watching how AI spending will translate into real revenue for big tech, Apple's results have provided reassurance," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Unlike Microsoft, which has invested billions in AI, Apple has taken a more cautious approach, incorporating AI into its hardware to drive sales.

This strategy paid off earlier this week, when Chinese AI startup DeepSeek released free AI technology, raising concerns about price wars and affecting competitors' stocks while giving Apple a slight boost.

Despite strong overall sales and profits, Apple's iPhone revenue for the holiday quarter fell slightly short of Wall Street expectations, owing to a delayed rollout of artificial intelligence features. "China remains a key wildcard, but Apple Intelligence is bolstering iPhone performance in regions where available, setting up a return to iPhone growth in FY26," Morgan Stanley's analysts said.

Apple is gradually introducing AI-powered features like email draughting and call transcription, but it has yet to find a local partner in China to implement them.

"China demand may recover as AI features are launched," TD Cowen analysts added. Following the earnings report, at least eight analysts raised their price targets for Apple stock, bringing the median to $250, according to LSEG data.

In 2024, Apple's stock increased by 30.07%, Microsoft's by 12.09%, and Meta's by 65.42%. Apple's 12-month forward price-to-earnings ratio is 31.12, versus Microsoft's 29.2 and Meta's 26.7.