MW Here's how Apple's stock could transform from AI laggard into a big winner

By Christine Ji

Hardware providers like Apple are poised to become 'key winners' in the AI revolution, according to Bernstein

Bernstein began coverage of Apple's stock with a price target of $290 and an outperform rating.

Apple Inc. hasn't been able to shake its reputation as an artificial-intelligence laggard, and as a result the stock is down 3% this year as many other technology stocks have soared. But to Bernstein analyst Mark Newman, there's a massive opportunity for patient investors.

He initiated coverage of Apple's stock $(AAPL)$ with an outperform rating and a price target of $290 - because of AI, not in spite of it.

Newman said he sees "significant upside in the long term for IT hardware," with Apple being the biggest hardware beneficiary in the AI revolution as it progresses toward "on-device AI" offerings.

On-device AI involves processing AI tasks directly on an iPhone or Mac without needing to send data to a remote cloud server. This type of technology could play to Apple's strengths of enhanced security and privacy, as well as provide quicker data processing. Models are rapidly improving and could reach a point where they could be downsized to fit on a device to perform agentic tasks, according to Newman. For example, users could utilize Siri to call a ride-share service.

While some investors have bemoaned Apple's lack of a killer app and delayed Apple Intelligence features, Apple can afford to take its time to develop AI, Newman believes, he said.

Sweeping changes in technology can be disruptive, but Apple has an opportunity to reinvent itself and remain an industry leader through new form factors, Newman wrote in his report, published after Monday's market close. Hardware providers are experimenting with emerging form factors such as glasses, headsets, foldable phones and laptops, and rings. Apple's success will depend on its ability to package AI technology into an easily accessible and convenient device.

Additionally, after the resolution of Alphabet Inc.'s $(GOOGL)$ $(GOOG)$ Google antitrust case, a "key risk" to Apple has been overcome, according to Newman, as Apple will still be able to conduct a revenue-sharing agreement with Google. It's a positive sign for the stock going forward, as services revenue has become a key driver for Apple's growth.

Of course, the AI transition is not without risk, and Newman cautioned that poor execution would be the biggest potential stumbling block for Apple going forward.

However, Apple users appear to be less attuned to AI features than owners of Android devices, which means that even if Apple isn't the first to launch on-device AI, it "still has time to copy or buy similar capabilities before its position truly comes under threat," Newman said.

Also read: Don't let Apple's stock dip fool you. The iPhone 17 could power a big rally.

-Christine Ji

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September 16, 2025 10:43 ET (14:43 GMT)

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