Apple (AAPL) just secured a major vote of confidence from Wall Street, even as a broader rout batters AI-linked stocks. HSBC lifted its rating on the iPhone maker to Buy from Hold and boosted its price target by 41% to $366, arguing the company is approaching a pivotal operational turning point that will be driven by a revamped Siri, a new foldable iPhone, and a capital-light artificial intelligence strategy.
Shares of Apple climbed 1.76% in Friday trading, extending a rally that has already made the stock the best performer among the Magnificent Seven this year. The gains came on a day when most technology names slipped after Chinese AI startup Moonshot released a new model, reigniting fears of intensifying competition. Apple’s relative resilience underscores a growing conviction on Wall Street that the company’s approach to AI—spending far less than rivals while controlling the devices consumers actually use—may be the smarter long-term bet.
HSBC analyst Nicolas Cote-Colisson wrote in a note to clients that Apple is now well positioned to leverage its massive installed base of roughly 2.5 billion devices with the forthcoming overhaul of Apple Intelligence. He highlighted a key financial metric that sets Apple apart from the hyperscalers: the company is expected to invest only 2.5% of its estimated 2026 sales in capital expenditure, compared with roughly 39% for cloud giants that are pouring billions into AI infrastructure.
“Thus far, we had retained a cautious approach on Apple with a Hold rating,” Cote-Colisson said. “We had preferred other segments of the AI value chain, more prompt to exploit the bottlenecks created by the high demand in computing power, including hyperscalers or memory makers. But Apple is now at an operational turning point.”
The upgrade is anchored on two pillars: software and hardware. On the software side, Apple is preparing to launch a completely redesigned agentic Siri later this year. The new digital assistant will incorporate visual intelligence and context-aware interactions that work across multiple applications. It will rely on foundation models distilled from Google’s Gemini, running both on-device and through Apple’s private cloud infrastructure. HSBC believes the deployment timeline of these AI enhancements is ideally synchronized with the hardware refresh cycle planned over the next two years.
On the hardware front, the product pipeline looks unusually crowded. The iPhone 18 Pro and Pro Max are expected this autumn. An iPhone Air variant is targeted for April 2027. Further out, a book-style foldable iPhone, a special 20th-anniversary edition iPhone, and smart glasses are all projected for 2027 releases. Market reports indicate Apple has already told its supply chain to prepare for roughly 10 million foldable iPhone units, up from an earlier estimate of 7 million to 8 million, signaling growing internal confidence in the new form factor.
“Combined with better AI, this could trigger a strong renewal cycle for users of iPhone series 15 and 16,” Cote-Colisson wrote. HSBC raised its 2027–2028 group revenue forecasts by 7% to 9%, lifted iPhone unit sales estimates for 2027 by 11% to 13%, and increased its 2027 earnings per share projection by about 8%. The new $366 price target is based on a 2027 non-GAAP price-to-earnings multiple of 33.5 times and implies roughly 12% upside from current levels. The bank’s blue-sky scenario suggests an additional $31 per share of potential upside.
The bullish call lands just ahead of Apple’s fiscal third-quarter earnings report on July 30. Analyst consensus projects earnings per share of $1.89 on revenue of $108.85 billion.
A Rockefeller playbook for the AI era
HSBC’s upgrade echoes a narrative that has been gaining traction in financial media. Barron’s recently compared Apple’s AI strategy to the playbook used by John D. Rockefeller when he built Standard Oil. Rather than taking on the risky and capital-intensive business of drilling, Rockefeller focused on refining and distribution—the downstream choke points. Apple, the argument goes, is letting competitors such as Microsoft (MSFT), Amazon (AMZN), Alphabet (GOOGL), and Meta (META) spend hundreds of billions of dollars developing large language models, while it waits to integrate the most competitive models into the devices consumers already use every day.
That strategy has helped Apple’s stock surge more than 20% since late June, repeatedly hitting all-time highs. The company’s market capitalization now stands at about $4.89 trillion, rapidly closing the gap with AI chip leader Nvidia (NVDA), which sits at roughly $5.02 trillion. Among the Magnificent Seven, only Meta has posted a larger gain this quarter, up about 19%, while Alphabet has risen less than 1%, Microsoft has added 8.5%, and Amazon has gained 6.2%.
Not everyone is convinced
Despite the recent momentum, Wall Street remains more divided on Apple than on its mega-cap peers. Only about 60% of analysts recommend buying the stock, according to Bloomberg data, compared with roughly 90% buy ratings for Microsoft, Amazon, Meta, and Nvidia. Among the 30 analysts tracked by TipRanks, 19 assign a Buy rating, nine recommend Hold, and two rate it Sell. The consensus 12-month price target sits at $328.69, slightly below where shares were trading Friday.
Earlier this week, KeyBanc downgraded Apple to Underweight, citing concerns about demand and valuation. The skepticism reflects lingering questions about whether Apple Intelligence, first introduced in June 2024, has yet delivered compelling use cases that would drive a mass upgrade cycle. The iPhone 18 series this autumn will be the first major test of whether consumers are willing to pay a premium for AI features embedded in Apple’s ecosystem.
The foldable iPhone represents another wildcard. While the higher expected price point could help offset rising memory costs, the category remains unproven in the premium smartphone market. Apple’s decision to raise its initial production target suggests it sees demand materializing, but execution risk remains.
For now, the market is rewarding Apple’s capital discipline. In an environment where investors are increasingly scrutinizing the return on massive AI infrastructure spending, Apple’s 2.5% capex-to-sales ratio looks like a feature rather than a bug. Whether that advantage persists will depend on the products arriving this fall and beyond.