Bernstein Keeps Outperform on Apple, $380 Price Target

Bernstein SocGen Group analyst Mark C. Newman reiterated an Outperform rating and $380 price target on Apple (NASDAQ: AAPL).

“AAPL is often un-loved and underweight but has been growing in appeal as a safe haven from higher flying / higher risk AI stocks.

As a result of this perceived safe haven status, AAPL has benefited from the recent AI sell-off driving its PE to all-time high levels. This note addresses why this has happened, and more importantly what’s the right multiple?

At 2% of revenue, Apple’s capex budget has hardly been impacted by AI as it has chosen to partner with Google for its Apple Foundation Models (AFMs) and as it rolls out its Siri AI, many of the AFMs run on-device and hence rely less on expensive AI servers.

Apple is immune to both the risk of AI datacenter capex falling that plagues upstream stocks and the risk of collapsing free cash flow that hyperscalers are currently seeing.

Furthermore, Apple could stand to benefit if/when the AI bubble actually bursts (e.g. from potentially cheap acquisition targets).

Apple now trades at 37x CY27 cons. EPS (an all-time high) and 2x relative fwd P/E (also an all-time high). Among US-listed companies with a market cap >$200bn and fwd cons EPS growth <15%, only four trade above 30x fwd P/E: Costco (46x), Walmart (39x), Apple (37x) and GE (36x).

Apple trades in-line with consumer stocks on revenue growth; on earnings and FCF growth it sits modestly above the line. Apple at 37x screens cheaper than both Costco (46x) and Walmart (39x) despite having higher revenue growth, FCF generation and shareholder returns.

Furthermore, Apple’s 90% loyalty (every ~4years) on iPhone replacements compares favorably with Costco’s 90% annual membership renewal.”

This research note is reproduced verbatim from the issuing firm. Price Target never edits, paraphrases or alters analysts’ words — we only republish them in one place.