Apple rises as sales forecast sparks iPhone revival optimism

Apple (AAPL.O) shares rose more than 3% in premarket trading on Friday after the company forecast relatively strong sales growth, hinting at a recovery from a dip in iPhone sales as it rolls out artificial intelligence features.

"With investors highly tuned into how AI spend will represent real revenue for big tech, Apple's results have provided...reassurance," said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Unlike its technology peers such as Microsoft (MSFT.O) who have poured billions into AI-related investments, Apple took a prudent approach, betting on AI as features meant to help sell its latest hardware.

That approach paid off earlier this week when China's DeepSeek unveiled free AI technology that sparked fears of price wars, sank stocks of some of Apple's competitors and sent shares of the iPhone maker up slightly.

Despite strong overall sales and profits, the company delivered a slight drop in iPhone revenue for the holiday quarter that missed Wall Street estimates, due to a lack of AI features.

"China remains a key wildcard, but Apple Intelligence is bolstering iPhone performance in regions where available, setting up a return to iPhone growth in FY26," Morgan Stanley analysts said.

The firm is rolling out AI features, such as drafting emails and transcribing phone calls, but has not yet secured a local partner in China to release them.

"China demand could recover as AI features get launched," TD Cowen analysts added.At least eight analysts raised their price targets on the stock following the company's quarterly results, bringing the median target to $250, according to data compiled by LSEG.

In 2024, Apple's stock climbed 30.07%, Microsoft (MSFT.O) rose 12.09% and Meta (META.O) soared 65.42%.

Apple's 12-month forward price-to-earnings ratio is 31.12, compared with Microsoft's 29.2 and Meta's 26.7.