HSBC has upgraded Apple (AAPL) from Hold to Buy, significantly increasing its price target by 41% from $260 to $366. This key change comes as analyst Nicolas Cote-Colisson declares Apple is at an "operational turning point" fueled by advancements in artificial intelligence (AI) and an exciting product pipeline.

The anticipated growth is correlated with Apple's installed base of 2.5 billion devices, which HSBC views as a critical driver for boosting AI adoption. This is particularly noteworthy when comparing capital expenditure strategies: Apple invests just 2.5% of its projected 2026 sales in capital spending, while hyperscalers allocate a staggering 39%. This disparity suggests that Apple's cost structure could provide a competitive edge moving forward, and the market may not yet fully appreciate this advantage.

A key element in HSBC's analysis is the revamped Siri, now equipped with visual intelligence and the ability to hold context-aware conversations across applications. This new functionality, based on advanced foundation models derived from Gemini, is set to launch alongside Apple’s upcoming hardware refresh. HSBC believes that this AI rollout will align perfectly with an aggressive hardware cycle expected over the next two years, potentially revitalizing user interest and leading to increased sales.

In terms of product offerings, Apple has one of its busiest schedules ahead. The iPhone 18 Pro and Pro Max are anticipated to hit shelves this fall, followed by an iPhone Air in April 2027, a foldable iPhone, and even smart glasses by the end of 2027. These developments suggest that Apple aims to create a compelling ecosystem that encourages consumers to upgrade, thereby driving strong revenue growth.

HSBC has also adjusted its revenue forecasts for 2027-28 upwards by 7-9%, with iPhone sales estimates increased by 11-13%. The bank’s new price target implies roughly a 12% upside from current levels, with a blue sky scenario estimating additional gains of $31 per share.

The upcoming Q3 FY26 earnings report on July 30 is anticipated to show earnings per share (EPS) of $1.89 on revenues of $108.85 billion, with analysts collectively leaning toward a bullish outlook. TipRanks currently tracks 30 analysts, showing that 19 rate AAPL as a Buy, indicating a strong consensus on the stock's growth potential.

This information is for educational purposes only and is not financial advice.