HSBC Upgrades Apple to Buy, $366 PT
HSBC analyst Nicolas Cote-Colisson upgraded Apple (NASDAQ: AAPL) from Hold to Buy with a price target of $366 (from $260).
“Thus far, we had retained a cautious approach on Apple with a Hold rating.
We had preferred other segments of the AI value chain, more prompt to exploit the bottlenecks created by the high demand in computing power, including hyperscalers or memory makers.
We think Apple is now at an operational turning point: not only can the company stay away from the (too) high capex debate (it only invests 2.5% of its 2026e sales vs 39% for hyperscalers, see page 10), we think it is also well placed to leverage its 2.5bn installed device base with its forthcoming revamped Apple Intelligence.
This AI boost comes at the right moment, when we think Apple has one of its most innovative product pipelines in place.
Apple’s new agentic Siri AI will be deployed this year. Siri AI will come with visual intelligence, can access information across apps for context-aware conversations, and richer interactions.
As a reminder, Apple has to date failed to deliver the most attractive use cases of its Apple Intelligence platform, first presented in June 2024.
Apple will now rely on its foundation models that have distilled Gemini models and run on device and on its private cloud servers.
Hardware pipeline is strong, including iPhone 18 Pro and Pro Max this fall, an iPhone Air in April 2027, and most importantly a book-style foldable phone.
In 2027, we expect a 20th-year anniversary special edition iPhone and smart glasses. Combined with better AI, this could trigger a strong renewal cycle for users of iPhone series 15 and 16 (2023 2024).
We increase our 2027-28 group revenue forecasts by 7-9%, including iPhone sales by 11-13%. We expect iPhone sales of +11.6% in 2027 (Visible Alpha consensus +8.3%) after c21% in 2026e.
We also increase our 2027e Services revenue by 5.4%. Our 2027e EPS is up c8% to USD10.26, 7.5% above consensus.”
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