Apple is experiencing a robust year, and there’s a strong indication that its stock could climb even higher in 2025, according to JPMorgan. In 2024, the tech giant has outperformed the S&P 500, rising almost 35%, compared to the broader market index’s approximate 27% increase. Recently, Apple hit a new high and is on track for a fifth consecutive winning session, having closed lower just three times this December.
Alongside Apple’s impressive performance, the tech sector, in general, has given the market a boost earlier this week. Notably, all three major indices saw gains on Monday and Tuesday. Megacap tech stocks like Nvidia and Meta Platforms also saw incremental increases during these sessions. As we edge closer to the new year, analyst Samik Chatterjee takes an optimistic outlook on Apple. He points out, “There’s potential often undervalued by investors, including the company’s shift towards Services, the growing installed base, technological leadership, and strategic capital deployment options.”
Looking forward, Chatterjee anticipates an iPhone sales surge with the introduction of the iPhone 17 next year. This release is expected to spark a significant uptick in iPhone volumes, supported by advancements in Apple’s AI platform, Apple Intelligence. He forecasts iPhone sales will jump from 230 million units in fiscal years 2024 and 2025 to 251 million in fiscal 2026, eventually reaching 263 million units in fiscal 2027. Additionally, Chatterjee predicts a 9% compound annual growth rate in revenue from fiscal 2024 to 2027, with earnings soaring at a 16% compound annual growth rate.
Even in scenarios without the influence of AI, Chatterjee believes Apple will continue to thrive. Although earnings projections might differ significantly, he views the downside risk to volumes as limited within the context of stabilizing consumer spending. Should AI-related tailwinds prove elusive, he suggests revenue could grow at mid-single-digit rates. This level of growth would translate into earnings rising between 8% and 10%, supported by margin expansion and share repurchases.
“The bullish scenario with AI hinges on a volume upcycle,” Chatterjee commented. “However, even without AI, the case relies on robust growth in Services revenue and margins, minimal further downside in iPhone volumes, and maintaining a premium valuation while awaiting solid consumer adoption of new AI features.”
On the concern of potential tariff threats, Chatterjee believes Apple’s strategy of “modest” pricing adjustments could efficiently counter President-elect Donald Trump’s proposed tariffs. Throughout his campaign, Trump suggested tariffs exceeding 60% on goods from China, later promising additional duties on Chinese and Mexican products. Chatterjee, echoing others on Wall Street, asserts that Apple could offset any adverse impacts by expanding its manufacturing footprint in countries like India.
“If tariffs specifically targeting Chinese manufacturing are enforced, we expect Apple will utilize its growing assembly operations in India to fulfill U.S. iPhone demand, thereby reducing tariff-induced volume headwinds,” Chatterjee remarked.
The majority of analysts on Wall Street share this bullish view of Apple. Out of 49 analysts covering the company, 35 hold a strong buy or buy rating, according to LSEG data, while 12 have adopted a neutral hold stance. On Thursday, Apple’s shares rose 0.3%, contributing to a more than 9% increase so far this month.
