Apple shares jumped Monday after a Wall Street firm promoted the iPhone maker ahead of its quarterly earnings report. News Evercore ISI added Apple to the company's list of tactical outperformers, helping shares rise more than 1% in Monday's session. Analysts said Apple shares may be able to rally higher after a late October earnings report that only matches Wall Street estimates, so investors should be well positioned accordingly. This is because the stock has lagged in recent months and investors have lowered their expectations for the quarter. Apple entered Monday's session about 3% below its all-time closing high of $234.82 per share set on July 16. By contrast, the S&P 500 rose just over 3% over the same stretch. “Sentiment toward Apple has turned further bearish in recent weeks, and we believe buy-side expectations are likely to be lower than current consensus estimates,” the analysts wrote in a note on Sunday. “Against this backdrop, we expect Apple to deliver consistent results versus current estimates, which should enable the stock to perform higher.” The company, which maintained an equivalent buy rating on the stock, said the market remained too focused on the possibility of weak demand for the iPhone in China, Apple's second-largest market, arguing that such risks were overstated. The analysts emphasized that any weakness could be offset by “a strong upgrade cycle in the US where our survey work indicates strong upgrade demand, driven in part by artificial intelligence.” The big picture Apple will release results on October 31, a quarter in which management can prove the naysayers wrong. Bears have long attacked Apple's business in China as a reason to sell because its smartphone market has become increasingly competitive with local players like Huawei grabbing share. The optimism has partly overshadowed concerns about Apple's new AI-capable iPhones. The iPhone 16 models were released in late September, and will soon feature a suite of artificial intelligence tools called Apple Intelligence. It is supposed to be released to users in the coming weeks. Bottom line: We don't recommend investors add to Apple ahead of quarterly earnings. However, we agree with Evercore's optimism about AI iPhone integration, and its ability to enter an upgrade cycle for Apple's flagship device. We've long maintained that innovative features like these will encourage users to switch their iPhones to newer models. But as our “own it, don't trade” view regarding Apple stock continues, it's acceptable for the upgrade cycle to start slower. “I support a prolonged (upgrade) cycle,” Jim Cramer said Monday. “They don't have to have an iPhone 16 to be perfect. They just have to have demand over time.” (Jim Cramer's Charitable Trust is long AAPL. See here for a full list of stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim takes a trade. Jim waits 45 minutes after a trade alert is sent before buying or selling a stock in his charitable fund's portfolio. If Jim talks about a stock on CNBC TV, he waits 72 hours after the trade alert is issued before executing the trade. The above Investment Club information is subject to our Terms and Conditions and Privacy Policy, as well as our Disclaimer. No obligation or fiduciary duty exists or is created by your receipt of any information provided in connection with the Investment Club. No specific results or profits are guaranteed.
Tim Cook, CEO of Apple Inc., welcomes customers during the first day of in-store sales for the latest Apple products at the Apple Fifth Avenue store in New York, US, on Friday, September 20, 2024.
Victor J. Blue | Bloomberg | Getty Images
apple Stocks jumped Monday after a Wall Street firm promoted the iPhone maker ahead of its quarterly earnings report.