Apple shareholders needed a big end to the summer, and they may be getting just that.
The company’s third-quarter earnings and revenue beat estimates last week. CEO Tim Cook then joined President Donald Trump at the White House on Wednesday to announce an additional $100 billion in U.S. investments, sending the stock soaring.
Apple shares were still down 12% this year to $220.03 as of Thursday’s close, lagging well behind other megacap tech stocks. But after the solid week, analysts at Wedbush Securities and Melius Research see a path back to above-market returns for the tech giant.
“It’s finally been a good week for Apple bulls after a frustrating year,” wrote Dan Ives of Wedbush in a research note Friday.
Apple’s lack of a robust artificial-intelligence strategy relative to its peers has been one reason for frustration. This dilemma has been a “black cloud over the stock,” Ives said, as he outlined three steps the company can take to prove Apple is a serious AI player.
Most notably, Ives is advocating for Apple to buy Perplexity, the AI search-engine start-up. Some on Wall Street have been pushing for a Perplexity acquisition this year, and Ives said he’d be comfortable even if Apple paid $30 billion or more to make that happen.
(News Corp., the owner of Barron’s publisher Dow Jones, has sued Perplexity AI alleging copyright infringement. News Corp. also signed a multiyear partnership with OpenAI in March 2024.)
Apple also needs to double down on its partnership with Alphabet, Ives argued, by fully integrating Google’s Gemini AI into the iPhone. Any such move may draw regulatory scrutiny, with the two companies’ Google search partnership already under the microscope in Google’s ongoing antitrust litigation. But Ives believes expanding the relationship is a smart bet.
Lastly, Ives thinks Apple needs more AI innovators in the building, though he conceded Cook is likely to stick around for the foreseeable future. “The current management team including Cook has Apple on an AI treadmill on 2.5 [miles-per-hour] speed going nowhere,” Ives wrote.
Apple did not immediately respond to a request for comment.
Wedbush reiterated an Outperform rating on Apple stock with a $270 price target. In June, Wedbush Fund Advisers launched the Dan IVES Wedbush AI Revolution exchange-traded fund, which includes Apple.
Another worry weighing on Apple’s stock has been tariffs. That’s where the company’s now-$600 billion commitment to the U.S. comes in, argued Ben Reitzes of Melius Research in a note Friday.
The company’s new American Manufacturing Program, which includes the latest investments, “is designed to localize more of Apple’s manufacturing footprint and reduce reliance on overseas supply chains,” Reitzes wrote.
The most important effect? “It relieves Apple from paying incremental tariffs on U.S.-bound iPhones from India,” he added.
That’s good news for a company that—lest we forget—is still America’s dominant smartphone maker. Users haven’t seemed to care about the AI delays that have spooked investors, and don’t seem to be seeking alternatives to the iPhone, Reitzes wrote. That could put Apple in line for a strong iPhone product cycle beginning this fall, he said.
“We are going to take a risk here and raise our target and our numbers, taking out a huge portion of our tariff hits,” Reitzes concluded.
Melius lifted the target price on Apple stock to $260 from $240, and reiterated a Buy rating.
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