Bernstein Sets $290 Target for Apple on AI Prospects

Apple may not be the foremost player in the AI arena just yet, but Wall Street is optimistic about its future potential. Financial firm Bernstein has resumed coverage of Apple with an “outperform” rating, placing a $290 price target on its stock. Bernstein believes that Apple’s emphasis on on-device AI positions it as a major potential winner among hardware companies during the AI boom.

Focus on On-Device AI

According to Bernstein analyst Mark Newman, Apple holds a long-term advantage with AI tasks processed directly on devices such as iPhones, iPads, and Macs. This method offers faster and more reliable experiences, reinforcing Apple’s privacy and security strengths. Newman suggests that AI models will soon become compact and efficient enough to handle tasks locally, ranging from managing personal data to ordering a ride through Siri.

Apple has already hinted at features like Writing Tools and Image Playground within its Apple Intelligence initiative, but the biggest anticipation surrounds a more intuitive Siri, capable of understanding context and fulfilling its long-standing promises. While some critics say Apple is without a standout AI application, Bernstein sees merit in Apple’s measured approach. The company can leverage its vast hardware ecosystem and dedicated customer base to refine AI offerings and integrate them smoothly into user experiences.

Financials, Risks, and Recent Developments

Bernstein’s $290 target hinges on a multiple of 32 times Apple’s fiscal 2027 EPS forecast of $9.03, which suggests nearly $143 billion in free cash flow. This valuation was validated against discounted cash flow models. A favorable development for Apple was the conclusion of Google’s antitrust case, securing its profitable revenue-sharing arrangement with Google’s search engine—a potential risk eliminated, according to Bernstein.

However, execution is critical. Apple risks faltering if it doesn’t deliver user-friendly AI experiences or if competitors outpace it. Goldman Sachs recently maintained a Buy rating for Apple, citing robust demand for the iPhone 17, but Phillip Securities downgraded its rating to Reduce with a $200 target, indicating mixed sentiments on Wall Street.

In the meantime, Apple is pressing forward on several other fronts: expanding Apple Pay with new installment options via Klarna, working on new hardware formats, and adjusting AI and Siri team leadership. Tim Cook’s recent visit to a Corning glass facility underscores Apple’s ongoing commitment to hardware innovation.

A Broader AI Hardware Outlook

Bernstein’s optimistic outlook isn’t solely focused on Apple. The firm anticipates enterprise AI inference spend to soar to $1.3 trillion by 2030, with a staggering 67% annual growth. Apple, described as the “gateway to the Intelligence Revolution,” is viewed as well-positioned for success if it executes its strategy well, but it’s also exposed to significant risk if it missteps.

Other companies like Dell are highlighted as likely beneficiaries due to rising demand for AI servers, while Seagate and Sandisk are poised to capitalize on increased data storage needs. IBM, meanwhile, is noted for its potential as a quantum computing frontrunner. Apple, however, occupies a unique role, poised at the consumer edge of this transformation, where its success hinges on making AI widely accessible through innovative formats like glasses, headsets, and even smart rings.

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