Amid tariff clouds and the delay of Siri AI, Apple's fundamentals remain resilient, and Bank of America maintains a bullish stance

According to the Zhitong Finance APP, as the Trump administration temporarily exempts so-called "reciprocal tariffs" on core electronic products such as smartphones, personal computers, and high-performance server chips, and as Trump recently stated he has no intention of firing Federal Reserve Chairman Jerome Powell or interfering with the Fed's independence, coupled with his own revelation that he will "significantly reduce" high tariffs on China, investor sentiment in U.S. tech stocks has clearly warmed recently, especially for Apple and Nvidia, two tech giants that heavily rely on the global supply chain system.

Wall Street giant Bank of America recently released a research report stating that based on Apple's consistently robust profitability, concerns over tariff policies have prompted a significant front-loading of demand for consumer electronics under Apple, strengthening the "upgrade logic" and thus improving gross margins. Even with the delay of the next-generation, more advanced AI features of the Siri digital assistant, Apple's iPhone business revenue is still expected to achieve steady growth. Additionally, with Apple's long-term and substantial share buyback and other shareholder return measures, they reiterated a "buy" rating for Apple stock, the most optimistic bullish rating.

However, the Bank of America analyst team indicated in the report that due to tariff concerns prompting some iPhone upgrade demand to be released earlier this year, the institution slightly raised its revenue forecasts for Apple's first calendar quarter (ending in March) and second quarter (ending in June), but lowered its expectations for revenue and earnings per share (EPS) for the third and fourth quarters and the next two years to reflect the higher long-term operational costs brought about by a more complex supply chain and the impact of the delay in launching the Siri digital assistant with more advanced AI features.

Therefore, in light of the above adjustments, the Bank of America analysis team maintained a "buy" rating while slightly lowering the target price for Apple from $250 to $240. As of Thursday's market close, Apple's stock price was $208.370, indicating that, in the view of the Bank of America analysis team, there is a potential upside of up to 15% for Apple's stock price, which has a market capitalization of $3 trillion, over the next 12 months.

The Bank of America analysis team stated that given Apple is in a multi-year new iPhone upgrade cycle, coupled with its substantial cash reserves for stock buybacks and opportunities to expand into new terminal markets including foldable iPhones, the diversity of its consumer electronics product portfolio and service business continues to increase, making it reasonable to assign Apple a valuation multiple close to historical highs. It is reported that the latest expected price-to-earnings ratio given by Bank of America for Apple is at a relatively high level compared to Apple's historical valuation range of 16-34x (median 27x) over the past 10 years.

In terms of fiscal year expectations, Bank of America adjusted its revenue/EPS forecast for Apple for fiscal year 2025 (FY25) from $411 billion/$7.30 to $412 billion/$7.25, and lowered its forecast for fiscal year 2026 (FY26) from $450 billion/$8.20 to $440 billion/$7.82. Based on this, Bank of America's latest target price is adjusted to $240, equivalent to an expected EPS of $8.21 for 2026, based on a 29x expected price-to-earnings ratio (the previous target price was based on a 30x expected price-to-earnings ratio and an expected EPS of $8.47 for 2026)

The Bank of America analysis team stated that although the iPhone shipment forecast was slightly reduced due to the delayed release of Siri AI and the potential impact of tariffs on gross margins was considered, given the strong upgrade expectations in 2025 brought by the Apple ecosystem and the large device base, Bank of America maintains a robust level for Apple's earnings per share in 2025. The institution's downward adjustment of the 2026 EPS and valuation multiples is to reflect the rising trend of long-term uncertainty in supply chain costs brought about by tariff policies. It is worth noting that, given the postponement of tariff measures, Bank of America only accounted for higher supply chain costs in its forecast, without considering the impact of retaliatory tariffs.

In addition, Bank of America believes that exchange rates will provide strong tailwinds for Apple's revenue and profit margins. Due to the weakening of the dollar (despite some short-term hedging), exchange rates will help drive Apple's revenue and profit margins above expectations starting from the quarter ending in June. Given the uncertainty in the overall global economic outlook, Bank of America expects that the overall demand for consumer electronics from Apple will experience a certain degree of slowdown, primarily reflected in the wearable device product line, which is more sensitive to the economic environment. However, Bank of America believes that the impact on demand for iPhone and Mac products, which are less elastic to price fluctuations, will be relatively small. We still expect the services business to maintain strong growth.

The launch of Siri's digital voice assistant feature, which supports more advanced AI, has been significantly delayed, which may further postpone the timeline for consumers to upgrade their iPhones in large quantities. As a result, Bank of America has lowered its performance expectations for Apple in 2026 to reflect this delay in Siri AI, but 2025 is expected to benefit from upgrade demand driven by both tariffs and AI features. However, iPhone models aimed at the Chinese market may be the first to launch more advanced AI features through partnerships with major Chinese tech giants related to AI. Bank of America also believes that Apple plans to release a thin and light "iPhone Air" in September 2025, as well as a potential foldable iPhone in September 2026. These new form factors are expected to stimulate upgrade demand beyond expectations, which is also an important potential catalyst for driving Apple's stock price upward