Apple Emerges as Citi's Top AI Pick, Surpassing Nvidia and Arista Networks

Apple moves to top AI pick at Citi, above Nvidia, Arista Networks By Investing.com

The move comes as Apple Inc (NASDAQ:AAPL) prepares to unveil its iPhone 16 lineup at the "It's Glowtime" product event on September 9th. Apple is expected to announce several new key updates at the event, including the A18 chips using the N3E process with an enhanced neural engine, improved camera and microphone features, and an upgraded modem for the Pro models. "Apple's Sep event is generally all about hardware updates, but we believe the company will put a lot of focus on how the hardware updates for the iPhone 16 family can better support its Apple Intelligence features that is expected to roll out officially later in the fall," Citi analysts said. They also anticipate a significant refresh with the iPhone 17 next year, as AI features will be gradually introduced over the coming year, allowing time for developers to create apps and for Apple to gain customer recognition. Citi projects iPhone 16/17 unit sales in calendar years 2024/2025 to reach 85 million and 92 million, respectively, with total iPhone units expected at 228 million in 2024 and 241 million in 2025. "AAPL stock on average outperformed the broader market since 2016 by 5%-6% over the period of Jun-Q earnings date into the Sep iPhone release date," analysts noted. Moreover, analysts said they are comfortable with the recent CFO transition at Apple, considering it a planned succession. Also, developer feedback on iOS18 beta AI features, including the new photo feature that removes unwanted objects, hints that AI will be a "compelling upgrade for iPhone refresh next year," analysts said. As for the outcome of the Google (NASDAQ:GOOGL) vs. DOJ antitrust case, Citi notes it is difficult to predict, however, it believes it is already priced in and views the Safari browser as a value add. "We believe Safari will still hold its value add to the company, but the final decision might impact Apple's strategy regarding seeking other partnerships or developing its own search engine." Recent reports revealed that Google lost its antitrust case against the DOJ concerning its monopoly in search and text advertising, including exclusive search deals with Android and Apple. Bloomberg previously noted that Google pays Apple 36% of its search revenue, amounting to $20 billion in 2022, representing ~5% of Apple's revenue and 17% of its operating profit.

Apple named top AI pick at Citi as iPhone refresh awaits (AAPL)

Apple (NASDAQ:AAPL) was in the spotlight on Thursday as Citi named the tech giant as its top artificial intelligence-related stock pick going into 2025, ahead of Nvidia (NVDA) and Arista Networks (ANET). Shares were up 1.2% in premarket trading. Analysts at the firm said early developer feedback on iOS 18 beta AI features have been positive, including the recently launched feature to remove unwanted objects with AI, which should provide consumers with a "compelling" reason to upgrade their iPhones. Additionally, the recent transition to Kevan Parekh as the company's new CFO and the Dept. of Justice case against Google (GOOG) (GOOGL) should not be of too much concern to investors, the analysts added. Apple is slated to hold its annual fall product event on Sept. 9, where it is widely expected to announce the new iPhone, along with new versions of the Apple Watch, AirPods and more. More on Apple Apple's iPhone 16 Dilemma: Wall Street Turns Cautious Over AI Hype Buffett Seldom Sells Winners, So What's The Deal With Apple and Bank of America? Apple: Not Ready To Bite Apple wireless chargers face ban in China under new regulations: report Apple inks pact with Airtel to offer streaming, music services in India