Dan Ives and his team see iOS 27 as the turning point that brings Apple's 2.5 billion users into the AI economy, with services revenue the main prize
Wedbush Securities has raised its price target on Apple Inc (NASDAQ:AAPL, XETRA:APC) to $400 from $350, keeping its 'outperform' rating on the stock as analyst Dan Ives argues the company is entering a new phase of growth built around artificial intelligence.
Apple shares were trading at $287.44 at the time of the note, published Thursday. The revised target implies upside of around 39%.
WWDC as the starting gun
The catalyst Wedbush is watching is the Worldwide Developers Conference in June, where new chief executive Kevan Ternus is expected to set out Apple's AI roadmap in detail. Ives describes this as the moment Cupertino finally steps into the AI revolution, with iOS 27 at the centre of the strategy.
The operating system update is designed to let Apple's 2.5 billion iOS users choose their preferred AI model as the default for Apple Intelligence features. Google's Gemini is expected to be integrated into the hardware ecosystem, alongside the existing ChatGPT arrangement with OpenAI. Anthropic's Claude is also cited as an option that users will be able to set as their default.
The practical effect, in Wedbush's reading, is that Apple becomes the distribution layer for consumer AI, hosting competing models on its platform rather than developing a single proprietary one.
Services as the revenue engine
The financial logic rests on Apple's services business. Wedbush estimates the AI push could generate an additional $15 billion in annual services revenue over time, as users pay for AI-enhanced features and expanded storage. The firm believes this potential is not reflected in the current valuation.
Ives puts the combined contribution of AI monetisation and services at between $75 and $100 of additional value per share, a figure that underpins the move to the $400 target.
Apple's existing services segment, which includes the App Store, iCloud, Apple Music, and Apple Pay, generated more than $100 billion in revenue in fiscal 2025. A meaningful AI uplift on top of that base would have a material effect on margins, given that services carry significantly higher margins than hardware.
Ternus and the hardware pipeline
Ives is also watching how Ternus shapes Apple's hardware direction after succeeding Tim Cook. The analyst credits the new chief executive with a strong grasp of the Apple product ethos and points to a pipeline that includes foldable phones, a redesigned AI-capable iPhone expected around 2027 on the device's 20th anniversary, and a revised version of Apple Glasses positioned at a lower price point.
These are longer-dated opportunities. The more immediate question at WWDC is whether Ternus can articulate a coherent software and AI strategy that reassures investors that Apple has not fallen behind rivals who moved earlier.
China remains a variable
Wedbush acknowledges the risks, particularly in China, where Apple faces competition from lower-priced domestic smartphones and ongoing pressure from trade and tariff policy. The firm flags a partnership with Alibaba on AI features as important to maintaining Apple's position in that market, though it notes the arrangement remains subject to regulatory scrutiny from Washington.
Wedbush's financial forecasts have Apple generating $472.5 billion in revenue in fiscal 2026, rising to $495.4 billion in 2027. Earnings per share are estimated at $8.64 and $9.35, respectively, over those two years.
The stock trades at 33 times the 2026 earnings estimate. Wedbush's $400 target is based on a sum-of-the-parts valuation model.