Apple's AI Breakout: How Much Higher Can it Go?

17 июн.

Apple’s (AAPL) share price surged to a record high last week, driven by the tech giant’s recent foray into generative artificial intelligence (AI). As investors celebrate this milestone, questions arise about how much higher Apple can go and whether this momentum is sustainable.

The Catalyst: Generative AI and iPhone Upgrade Cycle

The excitement behind Apple's rally was sparked by the announcement of its generative AI offerings. After a period of relative silence about its AI ambitions, Apple made a bold move, positioning itself alongside other tech giants like Microsoft and Google, who have already made substantial advancements in AI.

Generative AI has the potential to revolutionise various aspects of Apple’s product ecosystem. Imagine Siri with enhanced capabilities or hardware devices with significantly improved functionality. The market’s enthusiastic response reflects a belief that Apple’s AI initiatives could usher in a new era of innovation and revenue growth.

Adding to the surge is the potential for a significant iPhone upgrade cycle. With over 1.5 billion iPhone users worldwide, the introduction of new AI-powered features could trigger a massive wave of upgrades.

Historically, iPhone upgrades have been a substantial revenue driver for Apple. The integration of advanced AI features could entice current users to upgrade their devices, further solidifying Apple’s market position and driving financial performance.

The Breakout: Daily Candle Chart

Apple’s daily candle chart shows the significance of last week’s price action. The shares surged through a key area of resistance created by the highs that formed in July and December last year. The breakout was aligned with the stock’s multi-year uptrend and backed by strong volume. These two factors add weight to the theory that Apple’s AI-driven breakout is sustainable.

However, the Keltner Channels, which wrap a 2.25 ATR band around a 20-day exponential moving average (EMA), indicate that in the short-term Apple’s share price is over-extended. Apple’s breakout saw the shares race outside of the upper Keltner channel, creating the potential for prices to revert to the mean should buyers who bought during the breakout decide to take profits.

Given Apple’s long-term trend structure, we would expect the broken resistance zone to provide a key area of support moving forward. This structural level currently coincides with the 20-day EMA and may be targeted by trend continuation traders who are looking to time their entry into Apple’s powerful uptrend.


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