Analysts at investment bank Evercore ISI recently raised their price target on Apple (AAPL) stock, citing what they see as a “sizeable catalyst” for the iPhone maker. But history indicates that the upcoming development that they are touting may not move the needle for AAPL stock. 

The investment bank’s note was issued amid a fairly good run by AAPL stock. Specifically, in the three months that ended on Dec. 8, the shares had advanced 22.5%.

About AAPL Stock

Primarily due to the iPhone’s popularity and its high gross margins, Apple is one of the most profitable companies in the world. In the 12 months that ended in September, it generated income of $112 billion. Consequently, its market capitalization, which stands at about $4.1 trillion, is huge.

On the other hand, AAPL stock has lagged many of its Big Tech peers in recent years. In the last 12 months, the shares are up only about 13%, while they have gained 44% in the last two years. Conversely, Alphabet (GOOG) (GOOGL), for example, has jumped about 72% in the last year and roughly 136% in the last two years. 

One issue weighing on AAPL stock is the company’s inability (unlike many other tech heavyweights) so far to generate a great deal of revenue from the AI revolution. As Inc. Magazine explained in October, “The one thing that isn’t actually making Apple any money—at least, not right now—is its artificial intelligence push.” The magazine added that “Siri still can’t do most of the things the company promised a year and a half ago.”

AAPL’s top line increased 8% last quarter versus the same period a year earlier to $102.5 billion, and it has a trailing price-earnings ratio of 37.3 times.

Evercore’s Note and Its Plausibility

On Dec. 6, Evercore ISI analysts, led by the well-known Amit Daryanani, raised their price target on AAPL to $325 from $300, citing their belief that the firm’s upcoming AI innovations may provide a “sizeable catalyst” for the firm’s bottom line and its stock’s valuation. Additionally, Evercore believes that monetizing AI could boost the company’s revenue over the long term. 

But there are a few problems with this hypothesis. First, Apple bulls, since at least August 2024, have predicted that the advent of AI would spark “a major upgrade cycle for the iPhone.” Yet the demand for the iPhone 16 was generally seen as “mixed,” and while iPhone 17 sales have reportedly been fairly strong, they obviously haven’t moved the needle much for the company’s top line yet. Further, analysts on average only expect AAPL’s revenue to increase 8.85% during its current fiscal year, which ended in September, so many of them apparently don’t have a great deal of confidence in the device’s ability to tremendously accelerate the tech giant’s growth. 

While it’s encouraging that, according to Evercore ISI, Apple plans to use Alphabet’s critically acclaimed Gemini AI assistant to provide the upcoming iPhone’s AI capabilities, investors, given recent history, should be skeptical about AI’s ability to spark “a major upgrade cycle for the iPhone.”

Also importantly, data suggests that consumers’ use of AI is generally not generating the huge amounts of revenue needed to move the needle for AAPL stock. For example, a leading provider of AI for consumers, OpenAI, “is on track to generate more than $20 billion in annualized revenue this year,” its CEO, Sam Altman, said last month. But slightly over $20 billion of annual revenue won’t do much for AAPL, which reported $102.5 billion of revenue last quarter. So even in the unlikely event that the fruits of Apple’s AI monetization efforts quickly rival those of OpenAI, they probably won’t do a tremendous amount for AAPL stock. 

Finally, during Tim Cook’s long tenure as CEO, he’s kept the company’s bottom line marching steadily upward, albeit at a fairly slow pace, and the iPhone has remained very popular. But under Cook, the results of substantially all the firm’s efforts at innovation, from its efforts to develop a car to Apple TV to AI, have been rather underwhelming. 

The Bottom Line on AAPL Stock

Given history and the difficulties that AAPL will likely face in monetizing AI sufficiently to boost AAPL stock, I would not recommend buying the shares at this point.

On the date of publication, Larry Ramer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

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