Strong Chinese demand and a growing services business are critical on Apple's "yellow brick road" to a $1.5 trillion market cap, which Wedbush Securities analyst Dan Ives said is more than possible.
Ives initiated coverage of Apple with an outperform rating and a 12-month price target of $310, higher than any other analyst on Wall Street. His target is 40 percent higher than Apple's closing price on Thursday.
Services are the "linchpin" to the company's growth, Ives said in an interview with CNBC's "Power Lunch" on Friday. He predicts that the services business could reach $50 billion in annual revenue "in the next year and a half."
China, the world's largest smartphone market, is the "fuel in the engine" for Apple, Ives said.
Ives acknowledges that growing trade tensions between China and the U.S. could pose a threat to Apple, but he said the company is "ahead of the curve" with its manufacturing strategy. The Apple Watch and AirPods earphones were exempted last month from a new round of Chinese import tariffs imposed by President Donald Trump.
The biggest question is whether consumers can "start to digest that higher price point" of Apple products, Ives said. The iPhone XS and XS Max models, launched this month, are the most expensive iPhones to date.
"It's really just executing on China, executing on the iPhone strategy," that will propel Apple's growth going forward, Ives said.
Shares of Apple rose 1.3 percent Friday following the release of Ives' note to clients in which he announced his $310 price target. The stock is up 29 percent year to date.