Rothschild & Co Redburn has upgraded Apple to Buy, lifting its price target to $400 from $260, on the strength of the company's planned foldable iPhone and a possible pivot away from Google's AI models. The bank forecasts 14 million foldable units sold in fiscal 2027 and sees the device adding to average iPhone prices.
Rothschild & Co Redburn upgraded Apple to Buy from Neutral and raised its price target to $400 from $260, pointing to the company's planned entry into the foldable smartphone market and a shift in its AI strategy. Analysts led by Timm Schulze-Melander flagged that Apple Intelligence has so far disappointed.
Apple's reliance on Google comes under scrutiny
Apple currently runs a custom version of Google's Gemini, a deal that costs roughly $1 billion a year. Apple also continues to receive $27.5 billion annually from Google for search placement on its devices. The Redburn team argued Apple could strengthen its position by adopting open-source AI models, potentially in partnership with Nvidia, in a strategy it termed Fast Follower 2.0. The analysts said Nvidia's Nemotron models could reduce Apple's dependence on Google, though they acknowledged the relationship between the two companies has been "genuinely acrimonious" in the past.
Foldable iPhone expected to lift average prices
The upgrade also rests on Apple's planned foldable iPhone launch, expected in September. Redburn forecasts sales of 14 million iPhone Ultra units in fiscal 2027, with only 4 million of those seen as cannibalizing traditional iPhone sales, at an estimated price of $2,199, an 83% premium to the iPhone 17 Pro Max.
The analysts pointed to Apple's track record with AirPods and Apple Watch, which captured 65-75% of incremental unit growth in their respective categories after launch. They expect the foldable to add 11% to iPhone average selling prices by June 2027.
Source: Investing.com
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