The all-time high from Apple Inc (NASDAQ:AAPL, ETR:APC) on the back of its AI strategy launch at WWDC kicks off the "race to $4 trillion market cap", according to Wedbush analyst Dan Ives.
Shares in the Cupertino colossus vaulted another 5% higher on Wednesday, adding 13% over the past two days.
This period reflected investors "starting to fully digest that the AI Revolution will come through the consumer with an Apple device over the coming year", said Ives in a note to clients.
He pointed out two key impacts of Apple's AI strategy, first that he expects it to trigger a super cycle of iPhone upgrades, with 270 million of the 1.5 billion iPhones worldwide due for an upgrade (though other analysts disagree).
Second, he thinks developers will build numerous apps on Apple's AI platform, "in essence creating a new AI App Store over the coming years".
Ives acknowledged that Apple has been late to the game on AI, but having the biggest consumer installed base in the world gives it "a unique advantage to monetize the AI Party which is just beginning to play out".
Over the next year, "the race to $4 trillion market cap" will be a major focus of investors and media, between Apple ($3.36 trillion), Microsoft ($3.26 trillion) and hot-on-their-heels Nvidia ($2.97 trillion).
"Nvidia's GPU chips are in essence the new gold or oil in the tech sector as more enterprises and consumers quickly head down this path with the 4th Industrial Revolution well underway," Ives said.
"In our view the AI party is just getting started as its 9 pm in a party going till 4 am with the rest of the tech world now joining."
Ives said bears will continue to "harp on" about valuations of Nvidia, Microsoft, Palantir, MongoDB and other AI player, but he and his team believe "investors that have missed the biggest transformational tech stocks the last decade including Amazon, Netflix, Meta, Apple, Alphabet among many others have dogmatically stuck with the forward PE valuation approach on these unique tech stories".
"For the elite, transformational tech stories such as Microsoft and Nvidia with the AI Revolution investors must see the forest through the trees to where this spending wave (and estimates) can head over the next 3 years and we believe 60%-70% of enterprises will ultimately head down the AI use case path as we estimate a $1 trillion of incremental AI spend over the next decade."