<div id="readability-page-1">Apple (AAPL -3.39%) started 2025 on a downbeat note as shares of the technology giant headed south for most of January, but the fiscal 2025 first-quarter results it released on Jan. 30 could help turn its fortunes around. For the period, which ended Dec. 28, 2024, Apple's revenue increased 4% year over year, while its earnings exceeded analysts' expectations with a 10% jump. Apple delivered those improvements despite a 1% decline in revenue from sales of iPhones. More importantly, the tech giant's outlook and management's comments regarding the adoption of its artificial intelligence-enabled devices point toward a better year. Let's take a closer look at the key takeaways from the company's latest report and consider if its catalysts are solid enough to push the stock higher over the next three years. <h2>The rollout of Apple Intelligence could drive stronger sales growth</h2> Apple Intelligence, the company's suite of artificial intelligence (AI) features for iPhones, iPads, and MacBooks, was announced in June last year. However, the rollout of Apple Intelligence has been gradual. Also, those features are only supported on newer devices such as iPhone 15 Pro models, the latest iPhone 16 models, iPads running A17 Pro or M1 chips and later, and MacBooks with M1 chips and later. The company will continue to roll out Apple Intelligence features throughout the year in different languages. What's more, Apple is reportedly planning to make Siri more conversational with the help of large language models (LLMs). The good part for investors is that the rollout of AI features is having a positive impact on Apple's sales. Responding to an analyst's query on the latest earnings conference call, CEO Tim Cook remarked: <blockquote> We did see that the markets where we had rolled out Apple Intelligence that the year-over-year performance on the iPhone 16 family was stronger than those where Apple Intelligence was not available. </blockquote> It is worth noting that revenue from both iPads and MacBooks increased 15% year over year. That can be attributed to the wider availability of Apple Intelligence features across these devices. A similar scenario could unfold in iPhones as well once Apple Intelligence is more widely available across the company's flagship product line. Wedbush Securities analyst Dan Ives is forecasting a multiyear iPhone upgrade cycle thanks to AI. He estimates that there are around 300 million iPhones in use that are more than four years old. Their users will have a reason to upgrade once Apple Intelligence is available in their region, or the company makes more enticing features available for its new models. This is probably the reason why the company's revenue guidance for the current quarter is consistent with the growth it delivered in the just-concluded quarter (which coincided with the traditionally strong holiday season). CFO Kevan Parekh is expecting revenue to increase in the &#34;low- to mid-single digits year over year&#34; in fiscal Q2. However, he adds that &#34;the year-over-year growth rate would be comparable to that of the December quarter&#34; if the negative impact of foreign exchange headwinds is discounted. The guidance is better than expectations, suggesting that the company could be on its way to reporting stronger growth this year as its AI rollout gains momentum. Additionally, investors shouldn't forget that Apple is among the leading vendors in the smartphone and personal computer (PC) markets, both of which are expected to get a nice lift from generative AI. Apple was the top player in the global smartphone market last year with a share of 18.7%, according to IDC. Meanwhile, the company occupied fourth place in PCs with a market share of 8.7%. Counterpoint Research estimates the shipments of generative AI smartphones will quadruple by 2027. Meanwhile, sales of generative AI-capable PCs are expected to more than triple between 2024 and 2027. As such, Apple could be at the beginning of a nice growth curve for the next three years, and that could lead to healthy gains for its stock price. <h2>Stronger earnings growth could send the stock higher</h2> Analysts are expecting Apple's earnings to increase by 9% in the current fiscal year. However, they are forecasting accelerations in Apple's bottom-line growth for the next couple of years. <img src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/dcba0d9fda42488e766aa46adcac1b7d.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="720" height="380" original-src="https://imageproxy.pbkrs.com/https://media.ycharts.com/charts/dcba0d9fda42488e766aa46adcac1b7d.png"/> AAPL EPS Estimates for Current Fiscal Year data by YCharts. If Apple's earnings indeed hit $9.17 per share in fiscal 2027 and it trades at 33.5 times earnings at that time, in line with the current ratio for the Nasdaq-100 (using that tech-heavy index as a proxy for tech stocks), its stock price would be $307 -- a jump of 30% from current levels. Apple, however, is currently trading at about 37 times earnings. It may be able to keep commanding a premium valuation if its growth accelerates thanks to AI. Also, the tech giant could move to directly monetize its AI services, which could drive even stronger earnings growth and result in a stronger upside for shareholders. </div>

AAPL

Apple's stock has faced challenges at the start of 2025, but its fiscal Q1 results show a 4% revenue increase and a 10% earnings jump, despite a decline in iPhone sales. The rollout of Apple Intelligence, its AI features, is expected to boost sales, particularly for iPhones. Analysts predict a multiyear upgrade cycle for older iPhones, with revenue guidance suggesting continued growth. Apple's earnings are projected to rise by 9% this fiscal year, potentially leading to a 30% stock price increase by 2027 if growth accelerates due to AI advancements.

- Apple started 2025 with a decline in share prices but reported a 4% year-over-year revenue increase and a 10% earnings jump for fiscal Q1 2025.  
- The rollout of Apple Intelligence, its AI features, is expected to boost sales, particularly for iPhones, as it has already positively impacted iPads and MacBooks.  
- Analysts predict a multiyear iPhone upgrade cycle driven by AI, with potential earnings growth leading to a 30% increase in stock price by fiscal 2027.

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