This article first appeared on GuruFocus.
Apple (NASDAQ:AAPL) drew an upgrade to Buy from Neutral at Rothschild & Co Redburn, which raised its price target to $400 from $260. Apple shares were up 0.63% premarket.
Analysts led by Timm Schulze-Melander forecast 14 million units of the foldable iPhone Ultra in fiscal 2027, with only 4 million taken from existing iPhone sales, at a price of $2,199. That’s an 83% premium to the iPhone 17 Pro Max, and Redburn expects it to lift iPhone average selling prices 11% by June 2027. Its iPhone revenue forecasts run 3% to 14% above consensus through fiscal 2030.
Redburn says Apple Intelligence has disappointed, leaving Apple reliant on a custom Alphabet (NASDAQ:GOOGL) Gemini model to power Siri at a cost of roughly $1 billion a year, paid to the same company that sends Apple $27.5 billion annually for search placement. The suggested fix is adopting open-source models, possibly with Nvidia (NASDAQ:NVDA), whose Nemotron models Redburn says “matches closed, frontier model performance.” It notes the Apple-Nvidia relationship has been difficult historically.
Risks flagged include production delays, display crease visibility and hinge durability. A 2023 CNET survey found 64% of consumers didn’t want a foldable.
