Ben Reitzes says iPhone not replaceable, buy Apple stock before event
News Summary
Apple Inc. is set to unveil its latest devices, including the highly anticipated iPhone 17 lineup (potentially featuring the ultra-thin iPhone Air), alongside updated Apple Watches and AirPods, on September 9th. Ben Reitzes, Head of Technology at Melius Research, is bullish on Apple stock (AAPL), recommending a buy ahead of the "Awe Dropping" event. Despite Apple's underperformance compared to tech peers in 2025 year-to-date, Reitzes believes it is poised to catch up through the remainder of the year. His core thesis is that the "iPhone is not replaceable," emphasizing Apple's sustained market share and unmatched consumer loyalty. Reitzes expects the iPhone 17 lineup to drive higher Average Selling Prices (ASPs) and unit growth, foreseeing a multi-year upgrade cycle that includes a foldable iPhone and an "iPhone 20." Addressing concerns about Apple's lag in generative AI, he argues Apple is a "toll road to AI glory," set to profit from its digital real estate regardless of who leads in AI. He praises Tim Cook's measured approach to AI and anticipates Apple is quietly building a more integrated AI future through AI-enabled accessories like AirPods with cameras. Reitzes provides a "very conservative" price target of $260 for AAPL, with Wall Street targets reaching up to $275.
Background
Apple Inc. is a globally renowned technology giant known for its consumer electronics, software, and online services. The iPhone, as its flagship product, is a crucial driver of the company's revenue and market valuation. New iPhone launches are typically major events in the tech industry and financial markets, capable of significantly impacting the company's sales performance and stock price. However, in 2025, Apple's stock has underperformed its tech peers, and the company has faced criticism for being a laggard in generative artificial intelligence (AI). The market is closely watching how Apple integrates its AI strategy into its products to address increasingly fierce competition.
In-Depth AI Insights
Does Ben Reitzes' optimistic take on Apple's AI strategy overlook core risks? - Reitzes posits Apple as a "toll road to AI glory," profiting regardless of who leads, a defensive stance built on Apple's strong ecosystem moat. - However, if core AI capabilities (e.g., advanced language models or multimodal AI) become the decisive factor in user experience and Apple's own solutions fall short, its "toll collecting" ability could be eroded. - The key question is whether users will gravitate towards other platforms for superior AI experiences, or if Apple can integrate third-party AI services seamlessly while maintaining its brand appeal and privacy advantages. How long can the "iPhone is not replaceable" assertion hold in an era of rapid technological iteration? - Reitzes emphasizes the iPhone's irreplaceability and resulting user loyalty. This has been a formidable strength for Apple over the past decade, with extremely high ecosystem stickiness. - Yet, "irreplaceable" is not eternal. New computing paradigms (e.g., spatial computing, more immersive AR/VR experiences) or disruptive hardware innovations could challenge the smartphone's central role. - While design iterations like foldables or the "iPhone Air" may extend the cycle, a lack of fundamental technological leaps could slow consumer upgrade incentives in the long run, especially amidst global economic uncertainties. Apple's stock underperformance in 2025, does it signal a structural shift in its growth model? - Apple's year-to-date underperformance relative to peers in 2025 might reflect market concerns about its future growth drivers, particularly in AI and emerging technologies. - While an iPhone upgrade cycle and ASP growth are highly anticipated, persistent macroeconomic headwinds and fierce competition from the Android ecosystem could cap its upside. - Investors may be re-evaluating Apple's positioning as a mature giant rather than a high-growth tech stock, implying future valuations might depend more on stable cash flow and dividend growth than speculative growth expectations.