Citi Raises Apple Price Target to $365 on Market Share Gains, Pricing Power

Citi has raised its price target for Apple Inc. (NASDAQ: AAPL) to $365, reiterating its Buy rating on the stock. In a note to clients on Monday, the bank's analysts highlighted Apple's ability to continue gaining market share despite a challenging environment for consumer devices and its capacity to implement price increases to protect margins.

Outperforming a Declining Market

Citi's analysis points out that while the broader smartphone and PC markets are expected to decline by mid-to-high teens, Apple is successfully outperforming its competitors. The firm attributes this resilience to several factors, including:

• Share gains in the global smartphone market.
• Strong design-driven demand for its products.
• A robust position in the mid-range price segment, supported by promotions and subsidies.

Analysts noted that Apple has already raised prices on several products during the quarter to offset rising component costs. Citi expects this trend to continue, anticipating price increases for the upcoming iPhone launch in September, with a particular focus on higher-end models where demand is more inelastic.

AI and Services Outlook

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The bank does not expect the newly announced Apple Intelligence features to trigger a major hardware upgrade cycle in the immediate future. However, Citi argues that enhanced Siri AI capabilities should lead to higher user engagement, which will in turn support long-term growth in Apple's high-margin services revenue.

Regarding the services segment, Citi acknowledged that data from Sensor Tower showed App Store revenue growth of 3% year-over-year for the June quarter, which is below company guidance. Despite this, the firm considers iCloud and advertising to be stronger drivers for overall services revenue growth. The upcoming September iPhone launch was identified as a key catalyst that could boost investor sentiment.

Rationale for New Target

The decision to increase the price target to $365 is based on what Citi describes as "stronger margin expectations" for the company. The new target also reflects the bank's rolled-forward financial estimates for future periods. The note also mentioned a potential launch of a foldable device in the fourth calendar quarter.