Apple (AAPL, Financials) partnered with Alibaba (BABA, Financials) and is exploring a potential collaboration with Baidu (BIDU, Financials) to enhance its artificial intelligence capabilities in China, according to Wedbush Securities.
Over the previous year, the firm has seen market share losses to Huawei. Wedbush, however, hopes Apple's AI-driven developmentsalong with forthcoming iPhone 16 and iPhone 17 introductionswill assist to restore ground lost. Analyst Dan Ives sees Apple Intelligence as a main driver of iPhone upgrades, especially in areas where the technology has already been launched. China should have the AI capability by April or May.
Wedbush projects that ultimately 25% of the world's population will access artificial intelligence via an Apple device. Apple is hoping to stimulate expansion in China by creating an ecosystem of AI-powered apps grounded on Apple Intelligence. The project is supposed to generate fresh income and propel customer improvements.
With a 1% year-over-year drop in iPhone income for the past quarter$69.14 billionApple fell short of the $71.04 billion expectation. Greater China's revenue also fell to $18.51 billion.
China still presents a hurdle for Apple, but Wedbush notes simpler year-over-year comparisons and expects development to start in the area from the June quarter forward. Based on the Alibaba AI alliance, Wedbush thinks Apple CEO Tim Cook has properly handled the company's strategy in China despite continuous geopolitical concerns between the U.S. and China.
Wedbush maintained an Outperform rating on Apple shares and set a $325 price target.
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