Rothschild Redburn upgrades Apple to Buy, targets $400 on foldables and AI

Apple's valuation has long rested on its services segment, which generates gross margins of roughly 75%—more than double product margins—and grows at roughly three times the rate of Products. This structural advantage has made Services the most valuable part of Apple's franchise. However, the emergence of closed-source AI assistants from OpenAI, Anthropic, and others presents a novel threat: if consumers increasingly turn to these AI tools to search, transact, and complete activities online, they bypass Apple's ecosystem entirely, eroding the company's role as the primary gateway to digital life.

Rothschild Redburn's upgrade rests on two bets that Apple can thread this needle. First, the firm expects iPhone Ultra and broader premium foldables entry to drive iPhone unit growth and average selling prices higher—Cordwell projects 12% annual iPhone sales growth through 2030, 3–14% above consensus. Second, the firm believes open-source AI models offer Apple a path to revive Apple Intelligence as an independent, proprietary platform, one that keeps consumers within Apple's ecosystem while monetizing interactions through Apple Pay. This dual strategy—hardware refresh plus AI control—underpins the $400 target.