AAPL: Gemini Agreement And AI Features Will Shape Next Upside Phase

Analysts have nudged their Apple price targets higher, with moves such as Barclays' increase to $248 and multiple firms lifting forecasts as they cite healthier App Store trends, planned iPhone portfolio refreshes, and growing confidence in Apple's AI roadmap supported by the Google Gemini partnership.

Analyst Commentary

Recent research updates show a cluster of supportive views around Apple that revolve around three main themes: services momentum, product refreshes, and the AI roadmap anchored by the Google Gemini agreement. While price targets and ratings differ, a group of bullish analysts see current product and AI plans as important for execution and long term growth.

On services, one major bank cites third party data indicating App Store developer revenue of US$6.3b after 64 days of Apple's fiscal Q2, described as up 6.8% year over year. For investors who track Services as a key part of the equity story, this kind of data point is being used by bullish analysts to support the view that App Store trends remain constructive, even as other firms have pointed to slower growth in specific months.

On hardware, research commentary around the iPhone and iPad cycle has focused on portfolio timing and pricing. One firm highlights that the iPhone 17e and new iPad Air launched with unchanged starting prices at US$599 versus prior generations, and frames this as Apple refreshing the lineup ahead of wider AI and Siri upgrades expected later in the year. Another bank, while maintaining a more cautious rating, raised its Apple price target to US$248 and points to expectations that the September iPhone launch will feature foldable and Pro models, with base models shifting to spring 2027, and flags that fiscal 2027 iPhone unit volumes may be sensitive to price elasticity and memory cost.

AI remains a central topic in the latest notes. JPMorgan describes the confirmed multi year Gemini partnership as a key building block for Apple Intelligence across Siri and other applications, and argues that formal confirmation of the deal increases confidence in that roadmap. Wedbush characterizes the same agreement as an incremental positive for both Apple and Google, calling it a validation of Google's models and a way for Apple to accelerate its AI efforts into 2026 and beyond, while another Evercore report expects Apple to roll out AI features in phases and has added the stock to a tactical outperform list.

Not every research piece is firmly optimistic. UBS highlights that global iPhone sell through in January was up 9% year over year, but also warns that demand for the upcoming 18 series and rising costs, including memory, could affect Apple's growth path. UBS keeps a Neutral rating and a US$280 price target and has also flagged in other work that solid iPhone revenue can take a backseat to margin risk when component costs rise. At the same time, other bullish analysts argue that further Apple silicon integration inside devices could help offset those memory cost pressures.

AI timing and investor sentiment are another area where views diverge. Wedbush argues that the recent selloff in Apple shares related to concerns about AI feature delays and Siri is unwarranted and reiterates confidence that advanced AI features are still on track for a summer release window. Price target increases from several firms, including moves to US$330, US$325 and US$350, are framed around expectations for robust iPhone demand, manageable memory headwinds and a clearer AI story as the Gemini integration and Apple Intelligence plans take shape.

Bullish Takeaways

• Several bullish analysts are lifting Apple price targets into the US$325 to US$350 range, reflecting confidence in the company’s ability to execute on iPhone demand, services growth and AI feature rollouts.
• App Store developer revenue of US$6.3b after 64 days of fiscal Q2, cited as up 6.8% year over year, is being used by supporters as evidence that Services can continue to contribute to the valuation even when growth in some sub segments slows.
• The confirmed multi year Gemini partnership is viewed by JPMorgan and others as a key support for Apple Intelligence, which they see as important for sustaining Apple’s ecosystem advantages and justifying premium valuation multiples over time.
• Maintaining starting prices for the iPhone 17e and new iPad Air at US$599, while layering in Apple silicon and expected AI upgrades later in the year, is seen by bullish analysts as a way to support unit demand and protect margins, which feeds into their constructive view on earnings power.

What’s in the News

• Apple introduced new M5 Pro and M5 Max chips with an 18 core CPU and up to a 40 core GPU for MacBook Pro, with pre orders starting March 4 and availability from March 11, and pricing for the new models starting at US$1,699 for the 14 inch and US$2,699 for the 16 inch versions (Key Developments).
• Apple announced iPhone 17e with the A19 chip and C1X modem, a Ceramic Shield 2 front cover, IP68 rating, Apple Intelligence features in iOS 26, and starting pricing of US$599 for 256GB storage, positioned as a more affordable member of the iPhone 17 lineup (Key Developments).
• Apple launched a new iPad Air lineup powered by the M4 chip, offering up to 30% faster performance than the prior M3 model, support for Wi Fi 7, up to 12GB unified memory, and two sizes at starting prices of US$599 for 11 inch and US$799 for 13 inch, with pre orders beginning March 4 and availability from March 11 (Key Developments).
• Apple announced Studio Display XDR and new DICOM medical imaging presets plus a Medical Imaging Calibrator to support diagnostic radiology use on Studio Display XDR, pending FDA clearance in the U.S., with Studio Display XDR starting at US$3,299 and replacing Pro Display XDR (Key Developments).
• Apple expanded manufacturing in Houston, planning Mac mini production in the U.S. for the first time, scaling AI server assembly for its own data centers, and opening a 20,000 square foot Advanced Manufacturing Center to train students and suppliers, as part of a broader U.S. manufacturing and chip sourcing program (Key Developments).

Valuation Changes

• Fair Value: Steady at $350.0, with no change in the model’s central valuation anchor.
• Discount Rate: Edged down slightly from 8.29% to 8.29%, reflecting a very small adjustment to the risk assumption used in the cash flow model.
• Revenue Growth: Ticked up slightly from 9.84% to 9.94%, indicating a modestly higher assumed revenue expansion over the forecast period.
• Net Profit Margin: Moved marginally higher from 28.53% to 28.54%, implying only a minimal change in long term profitability expectations.
• Future P/E: Eased slightly from 37.63x to 37.52x, suggesting a very small reduction in the multiple applied to projected earnings.