Apple May Finally Catch Up In AI: Analyst Sees Big Upside From Perplexity Deal, Smarter Siri, Google Search Rivalry

BofA Securities maintained a Buy rating and $235 price target for Apple (AAPL), citing strong capital returns and the strategic potential of a rumored acquisition or partnership with Perplexity AI. The analyst views such a deal as highly positive, capable of significantly boosting Apple's AI capabilities, improving Siri, providing access to AI search technology and talent, and potentially opening a new revenue stream in the search advertising market, thereby addressing concerns about Apple's perceived AI laggard status.

Analysis

Bank of America Securities has reiterated its 'Buy' rating for Apple Inc. (AAPL) and maintained a $235 price target, signaling confidence in the company's financial strength and strategic direction. The core of this bullish thesis rests on three pillars: robust capital returns, leadership potential in artificial intelligence, and strategic optionality from new ventures. A key speculative catalyst highlighted is a potential acquisition of or partnership with Perplexity AI, an 'answer engine' firm. Such a deal is positioned as a pivotal move to counter the prevailing market view of Apple as an 'AI laggard.' The analyst suggests a tie-up could directly address key strategic vulnerabilities by providing immediate access to advanced AI talent and search technology, significantly enhancing Siri's capabilities, and creating a hedge against the company's reliance on Alphabet's Google as its default search provider. Furthermore, this move could unlock a new, substantial revenue stream by enabling Apple's entry into the search advertising market. This outlook is supported by a fiscal 2025 forecast projecting $407.69 billion in sales and an EPS of $7.13, indicating a clear path to growth driven by AI integration.

Key Decisions for Investors

• Investors may view the potential Perplexity AI deal as a significant catalyst that could accelerate Apple's AI monetization strategy and justify a higher valuation, given the $235 price target implies notable upside from the current $202.82 level.
• It is crucial to monitor for official announcements regarding an AI partnership or acquisition, as confirmation would likely validate the bull case and signal a direct strategic challenge to Alphabet's dominance in search.
• Consider the defensive implications of this move, as successfully developing an in-house search alternative would reduce a key operational dependency on Google and provide Apple with greater strategic independence and control over its ecosystem.