Investing.com -- Bernstein analysts believe Apple (NASDAQ:AAPL) stock could climb to as high as $290 per share in their bull case scenario.
The investment firm views Apple “as a quality compounder, with mid-single digit revenue growth, improving margins, disciplined capital return, and double-digit earnings per share (EPS) growth.”
“Given its negative cash conversion cycle, the stock is less expensive than it appears,” analysts led by Toni Sacconaghi added. “Investors have fared well by maintaining AAPL as a core holding, and adding to positions on pullbacks.”
Bernstein highlights Apple's unique position in the market with over 2.3 billion devices and nearly one billion “unique, demographically attractive users.”
Moreover, Sacconaghi and his team see the iPhone maker as a beneficiary of AI advancements in two major ways.
Firstly, an accelerated replacement cycle for Apple products is anticipated, likely around the fiscal year 2026. Secondly, Bernstein points out increased revenue opportunities for Apple, driven by the distribution and integration of large language models (LLMs) and third-party applications.
“Encouragingly, given its position as a channel/platform, Apple’s capex has remained low. A key question is whether AI could structurally alter iPhone’s replacement cycle,” analysts note.
They also observed that Apple stock has a distinct seasonal trading pattern, and while the iPhone 16 cycle might be tepid and could disappoint, the firm advises investors to buy the stock if it drops to $200 or below, particularly during the February to April timeframe.
Bernstein’s bull case for the stock implies Apple reaching $9 in EPS by the fiscal year 2026, which could value the stock at $290 per share.
On the other hand, the firm also acknowledged existential risks for the company such as a shift in hardware platforms, a tariff war or political escalation with China, or the emergence of a super app, while expressing less concern about potential remedies from the DOJ's antitrust case against Google (NASDAQ:GOOGL).