To The Moon

$Bank of America(BAC)$ kept its "buy" rating and $225 target price for $Apple(AAPL)$ shares on Monday, and naming it as the "best pick" for 2024.

The bank said that the slowdown in Apple's expected earnings growth has largely been reflected in the stock price, but AI-powered iPhone could drive a 36% surge in its stock price.

Wasmi Mohan, an analyst at American Bank, commented:

The demand is softer than we'd like, but the 14% decline in Apple's stock price so far this year has already been priced in. At the same time, the forecast for the rest of the year remained relatively unchanged. In fact, we've identified four potential catalysts that could boost the stock price before the year is out.

Four Catalysts

1. The earnings call next week. According to Mohan's prediction, Apple will boost its shareholder returns when it announces its second-quarter results, possibly through an increase in dividends, a bump in its stock buyback program, or both. Mohan expects a 5% hike in dividends and a $90 billion stock buyback plan.

2. Anticipated AI announcements at the WWDC software developers conference in June. This could inject some excitement into investors, as Apple hasn't made many recent AI announcements compared to other tech giants.

3. Rumored AI-enabled iPhone 16 expected later this year, offering built-in generative AI capabilities. This should help boost the company's profitability. Mohan revealed that their research suggests all four new iPhone models this year will feature the same application processor (A18), enhancing AI and machine learning performance.

4. Self-developed chips will reduce component costs and dependence on public cloud providers, significantly boosting profit margins. Plus, with strong growth in services like licensing, the App Store, iCloud, and subscriptions like Apple TV+ and Apple Music, Apple's services business is firing on all cylinders.

As for next week's earnings report, Bank of America expects Apple to beat Wall Street's expectations and report Vision Pro sales of a whopping $1 billion.