Apple Inc (NASDAQ: AAPL) is positioning itself for a significant market cap milestone as it plans to integrate new AI features and capitalize on a potential iPhone "supercycle," according to Wedbush Securities analyst Dan Ives.
What Happened: In an interview with CNBC's "Squawk on the Street," Ives predicted that Apple will be the first company to reach a $4 trillion market capitalization, potentially as early as next year. He cited the company's strong iPhone sales forecast and the anticipated impact of AI integration across its software ecosystem as key drivers.
"I see this as the beginning of a super cycle, which I believe is going to take Apple to the $4 trillion market cap early next year," Ives said. "They will be the first to hit it."
Ives noted that Apple's large existing iPhone installed base of over 300 million devices provides a significant upgrade opportunity, with the potential for 50% or more of those users to purchase new iPhones in the coming product cycle.
Furthermore, the analyst highlighted the importance of Apple's Services business, which he expects will be bolstered by the integration of AI across numerous apps and features. Ives anticipates this could generate an additional $10 billion to $20 billion in Services revenue for the company.
"This is now going to be the hundreds of apps built on Apple Intelligence, which is going to give an incremental 10, 15, 20 billion of services revenue that is the key to this renaissance to growth from Cupertino," Ives explained.
The analyst's bullish outlook on Apple's future performance is contingent on the successful integration of AI capabilities and the continued strong demand for iPhones, which he believes will reach a record 240 million units sold in the current fiscal year.
Why It Matters: Ives' prediction comes on the heels of Apple's recent advancements in AI technology. The company introduced its latest iMac, featuring the M4 chip and integrated Apple Intelligence, on Monday. This development is expected to significantly enhance user productivity while prioritizing data privacy.
Analysts have also expressed optimism about Apple's future earnings, with JP Morgan's Samik Chatterjee maintaining an Overweight rating on the company, citing AI upsides and resilience in Services revenues.
Ives previously said that skeptics of Apple who have overlooked the company's substantial rise-over $1 trillion in market capitalization-have misjudged three critical elements of Apple's trajectory: the installed base and pent-up iPhone upgrade demand, the growth of services and their valuation, and the emerging role of AI in consumer technology.
Price Action: Apple Inc. closed at $233.40 on Monday, reflecting a gain of 0.86%, for the day. In after-hours trading, the stock dipped 0.39%. Year to date, Apple's stock has seen significant growth, rising by 25.73%, according to data from Benzinga Pro.