Key Takeaways:
Rothschild & Co. Redburn upgraded Apple to Buy from Neutral and raised its price target to $400 from $260, implying about 31 percent upside from Friday's close.
"The strength in Apple's product roadmap and entry into foldable handsets appears underappreciated by the market," Timm Schulze-Melander, head of technology hardware and semiconductor research at Rothschild & Co. Redburn, said.
The analyst expects Apple to launch the foldable iPhone Ultra in September at $2,199, an 83 percent premium to the iPhone 17 Pro Max. Schulze-Melander forecasts 14 million units sold in fiscal 2027, with only 4 million of those cannibalizing conventional iPhone sales. The device could lift iPhone average selling prices by 11 percent by June 2027, with iPhone revenue forecasts running 3 to 14 percent above consensus for fiscal 2026 through fiscal 2030. Total earnings estimates sit 8 to 18 percent above consensus by fiscal 2030.
The upgrade also rests on a shift in Apple's AI strategy. Schulze-Melander sees Apple adopting open-source models, potentially in partnership with Nvidia, rather than relying on Google's Gemini, for which Apple pays roughly $1 billion annually. He described the approach as "Fast Follower 2.0," arguing Apple could become the "gatekeeper of consumer AI" and monetize interactions through Apple Pay and other payment platforms. Apple continues to receive $27.5 billion annually from Google for search placement.
Apple shares traded near $306, up 13 percent year to date but down 8 percent over the past month. Among 47 analysts covering the stock, 29 rate it a buy or strong buy, according to LSEG data. The S&P 500 ETF Trust is up 20 percent over the past 12 months, while the Invesco QQQ Trust is up 26 percent.
Supply chain reports suggest the foldable iPhone may launch initially in the United States only, with other markets waiting two to three months. Mass production slipped from June to August, with only 7 million units planned for the second half of 2026. The rollout would contrast with Samsung's Galaxy Z Fold 8 series, which launched in more than 100 markets in August. The White House has also told Apple it does not want the company buying Chinese memory chips to ease a supply crunch, Commerce Secretary Howard Lutnick said.
The upgrade gives Apple a fresh bull case as it enters a new product category and reworks its AI approach. Investors will watch the September event, expected around Sept. 8, for foldable iPhone pricing, availability, and details on the AI roadmap.
This article is for informational purposes only and does not constitute investment advice.
