Apple (AAPL -0.20%) is back on top of the stock market. The tech giant peaked in December at a market cap of $3.9 billion as the iPhone maker has soared lately on hopes for Apple Intelligence, its generative AI tools that are now built into iOS, and the market's belief that the Trump administration will be more lenient on regulating big tech. The Department of Justice is currently investigating Apple over monopolistic behavior in its closed Apple ecosystem, which could change in the next DOJ.
Building on the recent surge in Apple stock, one Wall Street analyst just lifted his price target to a Street-high level of $325 and maintained a buy rating.
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Ives gets more bullish on Apple
Wedbush's Dan Ives, who has been one of the biggest cheerleaders in the AI boom, continues to see Apple as one of the winners, arguing that Apple is heading into a Supercycle driven by the iPhone 16 and Apple Intelligence.
Ives believes investors are still underestimating the potential of the new AI platform, and significant growth in services revenue driven by AI. The analysts also sees sales in China as being stronger than expected.
Can Apple keep climbing?
Apple has yet to report a full quarter of results since the launch of the iPhone 16 in September so it's unclear how the new device is performing, though sales are up in China, according to Bloomberg, a positive sign as that is one of Apple's biggest markets.
However, Apple stock is now more expensive than it's been in over a decade, at a price-to-earnings ratio of 41. Based on its expected growth rate, that valuation doesn't seem easy to justify, as revenue rose just 6% in the fourth quarter to $94.9 billion, which drove earnings per share up 12%.
Apple does enjoy significant competitive advantages, but the business needs growth for the stock to move higher. If Ives is right about Apple and AI, the stock should climb, but it could easily fall at its current valuation.
