Dan Ives raises Apple price target, says iPhone maker will enter 'AI revolution' in 2026

Wedbush analyst Dan Ives reiterated an outperform on Apple and raised his 12-month price target to $350 from $320, implying roughly a 26% upside from Friday's close, citing Apple's newly articulated AI strategy and an expected partnership with Google's Gemini early next year. Ives projects AI monetization could add $75–$100 per share over coming years, expects Tim Cook to remain CEO through at least end-2027, and highlighted strong iPhone 17 sales and a healthy holiday season, with shares up ~11% YTD.

Analysis

Market structure: Apple partnering with Google Gemini and leaning into on‑device + distributed AI shifts rents toward ecosystem owners (AAPL benefit) and away from pure cloud‑only consumer AI players. Expect stronger iPhone hardware demand in near term (iPhone 17 momentum) and a multi‑year services monetization runway; Ives’ $75–$100/share uplift implies material revenue/profit optionality that could re‑rate multiples over 12–36 months.

Risk assessment: Tail risks include regulatory constraints on default bundling with Google, a weak revenue split in the partnership, or an execution failure on on‑device silicon (NPU) — any of which could wipe out much of the AI premium quickly. Immediate volatility risk around the formal Apple/Google announcement (days–weeks), execution and SDK rollouts (months), and true monetization (2026–2028) should be modelled separately with scenario P&Ls.

Trade implications: Tactical alpha is available through time‑levered structures: favor long exposure to AAPL while hedging event risk via short dated protection; favor call spreads to cap premium and fund positioning. Relative value: long AAPL vs select cloud/infra names that depend on datacenter AI demand (pricing differences), and reduce exposure to highest multiple AI infrastructure names that price perfection into 2026 earnings.

Contrarian angles: The market may underprice the difficulty of app‑ecosystem monetization and regulatory pushback — $75–$100/share is optimistic and assumes smooth SDK adoption and developer monetization in 24–36 months. If Apple’s approach is primarily on‑device, datacenter GPU demand dynamics for NVDA/AMZN may be less affected than consensus expects, creating mispricings between consumer AI winners and infra staples.

Key Decisions for Investors

• Establish a 2–3% portfolio long AAPL via a 12–24 month LEAPS call spread (e.g., buy Jan‑2027 350C, sell Jan‑2027 450C) to capture the 2026 AI monetization thesis; size to limit premium risk to ~2% NAV and take profits if AAPL > $350 within 12 months or if IV collapses >30%.
• If already long AAPL, sell 1–3 month ATM covered calls (generate premium) and simultaneously buy 3–6 month puts as a collar to protect vs announcement‑driven drawdowns; target net cost ≤0.5% NAV for protection through the partnership announcement window.
• Enter a 6–12 month pair trade: long AAPL (equal‑dollar) vs short GOOGL (or reduce comparable cloud exposure) sized 0.8:1 to express Apple distribution monetization while limiting market beta; unwind on official Apple‑Google terms release or after 90 days if revenue share is >20% in favor of Google.
• Trim high‑multiple AI infra exposure (e.g., NVDA/AMZN) by 15–25% if forward EV/EBITDA > 5‑year median or if price outperforms the sector by >20% in 30 days, redeploy proceeds into the AAPL LEAPS or cash to wait for clearer signals.
• Monitor three binary catalysts over the next 60–120 days (formal Apple‑Google partnership terms, WWDC announcements, NTSB/FTC/EC filings); if any regulatory probe is opened or partnership denies default AI placement, reduce AAPL net exposure by 50% within 5 trading days.