Apple Inc's (NASDAQ:AAPL, ETR:APC)introduction of Apple Intelligence, a suite of generative artificial intelligence (AI) features is poised to enhance the user experience across the iPhone maker's ecosystem - and could be a springboard for significant earnings growth next year and beyond.
That at least is the conclusion of Goldman Sachs in a research note providing its highlights from the tech giant's Worldwide Developers Conference (WWDC) held earlier this week.
Apple Intelligence integrates generative AI capabilities across its devices, including a notable partnership with OpenAI to embed ChatGPT into Apple's systems.
This collaboration will boost Siri's functionality and introduce system-wide tools for generative writing and image creation.
These features will be available on the iPhone 15 Pro and Pro Max, as well as select iPads and Macs with M1 chips or later models.
Goldman views this as a strategic step in Apple's AI strategy, leveraging both on-device and data centre processing to deliver sophisticated AI functionalities.
Alongside the AI advancements, Apple unveiled updates to its major operating systems. iOS 18 and iPadOS 18 will bring new customisation options, privacy enhancements, and productivity tools.
macOS 15, named Sequoia, will feature iPhone Mirroring and improved audio and video capabilities.
watchOS 11 will offer enhanced health tracking and personalisation, while visionOS 2 will upgrade the Vision Pro headset with new features and developer tools. tvOS 18 will enhance the Apple TV experience with better dialogue clarity and additional background information on streaming content.
Goldman anticipates these updates will drive Apple's product upgrade cycle and overall revenue growth.
The integration of AI features is expected to improve user experience and productivity, potentially increasing demand for new devices.
This optimism is reflected in Goldman's financial forecasts for Apple, projecting modest revenue growth in the near term and significant increases in 2025.
Earnings per share (EPS) are expected to rise from $6.60 in 2024 to $8.38 by 2026, with strong gross margins maintained by the high-margin services segment.
The conference also saw Apple announcing the global expansion of its Vision Pro augmented-reality headset.
Available in China, Hong Kong, Japan, and Singapore from June 28, and in Australia, Canada, France, Germany, and the UK from July 12, this rollout is expected to boost sales and adoption of the Vision Pro. Apple aims to leverage its extensive developer ecosystem to support this expansion.
Goldman maintained a "buy" rating for Apple, with a 12-month price target of $238, suggesting a 23.2% upside from the current price.
The firm believes Apple's strong ecosystem, continuous innovation, and expanding services segment will drive sustainable revenue and earnings growth. However, potential risks include supply chain disruptions, regulatory challenges, and intensifying competition.
Goldman Sachs remains positive about Apple's financial outlook, citing the company's robust product pipeline and strong market position as key factors for its continued success.