Apple Q4 Stock Price Forecast: Can iPhone 16 Drive AAPL to Record Highs?

Apple (AAPL) finally launched its artificial intelligence (AI)-powered iPhone 16 earlier this week. AAPL stock closed lower on Monday as the company unveiled the highly anticipated product, which wasn’t necessarily surprising since AAPL has historically underperformed the market on launch day for new iPhone models.

This doesn’t necessarily mean the products aren’t good; rather, it’s that the announcements are largely baked into the upfront pricing, and Apple typically doesn’t have additional positive announcements to make on launch day. In this article, we’ll take a look at Apple’s Q4 guidance and analyze whether the iPhone 16 could propel AAPL stock to new highs.

Apple iPhone 16 Launch

One of the biggest showstoppers at Apple’s iPhone 16 event was the reveal that the company’s flagship “Apple Intelligence” product wouldn’t be available at launch, with the features only coming next month. The company would then continue to add more features.

Apple Intelligence will initially launch in English in the US, expanding to local English in December. Support for languages ​​other than English will not be available until 2025. Importantly, Apple Intelligence will not be available in China and Europe for now due to regulatory concerns.

However, there was one surprising announcement at the event, namely that the new AirPods will now also double as a hearing aid. The tech giant has long had its eyes on the healthcare industry, with Tim Cook saying back in 2019 that improving human health would be Apple’s “greatest contribution to humanity.”

Analysts were a bit disappointed with the iPhone 16

Wall Street analysts were somewhat disappointed with the iPhone 16 upon its launch – particularly due to the lack of a clear timeline for the launch of Apple Intelligence.

Needham analyst Laura Martin doubts the narrative that the iPhone 16 will fuel a massive replacement cycle, saying, “I just don’t think there’s a compelling reason for anyone to run out and buy the new iPhone 16.” Instead, Martin believes buyers should wait for the iPhone 17 because it will “have better stuff and it will have more AI capabilities.”

JPMorgan analyst Samik Chatterjee, who is generally bullish on AAPL, says the details surrounding the AI ​​are “unclear.”

However, Wedbush analyst Dan Ives believes the iPhone 16 will be “the most successful iPhone launch in history” and raised his price target for Apple to $300, which would mean the company’s market capitalization would exceed $4 trillion. Ives said, “We believe that carefully rolling out Apple Intelligence features over the next 6 to 9 months is the right strategy to catalyze a large upgrade opportunity in Apple’s installed base.”

AAPL Stock Forecast

Apple currently has a “Moderate Buy” rating from 31 analysts covering the stock. Its average price target is $246.61, which is 10.7% higher than yesterday’s closing price.

Apple has had a love-hate relationship with sell-side analysts this year. Three brokerages downgraded AAPL stock in the first two weeks of January, a rare move for the company. But analyst sentiment has slowly shifted since then, particularly after the Worldwide Developer Conference (WWDC) in June, where Apple showcased its AI initiatives.

Could Apple shares hit new records in Q4?

Apple shares peaked in mid-July and have failed to regain those highs since then. Markets are now awaiting pre-order and early sales data for the iPhone 16 to get a glimpse of the traction the model is gaining. The next key data point will be Apple’s fiscal fourth-quarter earnings, which should provide a real look at how the iPhone 16 has performed in its first few weeks.

There are concerns about Apple’s valuations, especially since Warren Buffett sold shares in the company and nearly halved his stake in Q2. Apple’s NTM price-to-earnings (P/E) ratio currently stands at 30.8x, which is significantly higher than the 26.6x it has averaged over the past five years. However, I don’t think valuations are too demanding, even if they aren’t cheap.

Overall, the risk and reward look fairly balanced at these levels, and the upside will now depend on whether the iPhone 16 can boost Apple’s otherwise declining sales. If sales of the new model don’t meet expectations, we could see some weakness in AAPL stock in Q4. On the other hand, if this model does kick off a replacement cycle, as bulls believe, Apple shares could surge to new highs in the coming months.

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On the date of publication, Mohit Oberoi held a position at: AAPL. All information and data in this article is for informational purposes only. For more information, please refer to Barchart’s Disclosure Policy here.