Apple to reach $US4 trillion value in 2024: Wedbush
For Wedbush Securities’ Dan Ives, there appears nothing on the horizon that will derail Apple’s continuing valuation rise and the “golden opportunity” to own the stock over the next year.
Mr Ives, who has Apple as his top technology stock with a $US250 price target, said he expected the company’s market value to rise by one-third during 2024 to $US4 trillion ($5.9 trillion). Apple was 0.2 per cent higher to $US197.31 near midday in New York, for a $US3.07 trillion market cap.
Dan Ives estimates there are more than 100 million iPhones in China in the “window of an upgrade opportunity”. Bloomberg
“We believe Apple will be the first $US4 trillion market cap by the end of 2024 given the pace of growth and monetisation we estimate for Cupertino over the next year.”
Apple is based in Cupertino, California.
The key reason for Mr Ives’ optimism is enduring demand for the iPhone, in particular in China.
“While there are lingering worries around iPhone shadow government bans in China, for now this issue is very containable and has not dented demand for Cupertino in this key region based on our recent checks,” he said.
“We believe Apple is heading into a strong holiday season over the coming weeks that should translate into iPhone 15 growth that exceeds Street estimates for the December quarter on the heels of strong upgrade activity within the US and China markets that is resilient despite the bear noise.”
Upgrade opportunity
Mr Ives said he had not seen any negative revisions around iPhone units coming out of Wedbush’s recent Asian supply chain checks into holiday season/early 2024 “which speaks to what we believe is a very consistent consumer demand environment around iPhone 15 so far”.
Wedbush estimates that Apple could sell between 220 million and 230 million iPhones in fiscal 2024, and that could potentially increase if the current pace of upgrades extends into the March and June quarters.
“In our view the Street continues to underestimate the underlying upgrade opportunity in China during the December quarter and FY24. We estimate right now there is north of 100 million iPhones in China in the window of an upgrade opportunity and despite Huawei and geopolitical headwinds, Apple is seeing a very healthy December quarter for iPhone 15 in mainland China.”
Mr Ives is also bullish on Apple’s services business. “On a sum-of-the-parts valuation we believe the services business is worth $US1.5 trillion to $US1.6 trillion on a standalone basis, and this re-rating is a key dynamic for the stock over the next few quarters.”
As for the patent dispute related to some of Apple’s Watches, Mr Ives said: “We believe [it is] a headache issue but only $US200 million to $US300 million of delayed revenue for Apple this quarter. Will be a software workaround that is in process.”
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