A longtime Apple skeptic warms up to the stock. Why we're not cheering the call just yet

Published Mon, Apr 29 20244:14 PM EDT

A longtime Apple skeptic upgraded the iPhone maker, sending the struggling Club stock higher in Monday's session. Perhaps counterintuitively, Jim Cramer is not willing to celebrate the call just yet. Bernstein analyst Toni Sacconaghi upgraded Apple to buy-equivalent rating from market perform and maintained a price target of $195 per share, representing 15% upside from Friday's closing level. The call turned heads on Wall Street because the analyst had held a market-perform rating since early 2018 . Now, after Apple's rough start to the year, Sacconaghi contends "the pullback provides an attractive entry point." Apple shares ended last week down about 12% year to date, compared with a nearly 7% gain for the S & P 500. The Club's wariness around the upgrade stems from the timing. The tech giant reports quarterly results after the close Thursday, and now the challenged stock has found momentum. Including their 2.5% gain Monday, shares of Apple have climbed about 5% since their 2024 lows on April 19 and outperformed the S & P 500 in that stretch. "Apple got distorted today by an upgrade [from] someone who historically has been incredibly wrong" about the stock, Jim said on Monday. He added, "It's jacked it up to a point where if you were a trader, you'd probably sell some." AAPL YTD mountain Apple (AAPL) year-to-date performance In Monday's upgrade, Sacconaghi offered a largely upbeat view on Apple's long-term prospects – a view that we share. Despite some investor concern about the company's business in China being "structurally impaired," Sacconaghi said the firm believes "Apple's business prospects are largely unchanged." In addition to being cheap versus its recent history, Bernstein pointed to generative artificial intelligence features in the upcoming iPhone 16 as a positive for Apple stock – a call Jim's iterated many times in recent months . Integration of the nascent tech into the company's flagship device should lead to an upgrade cycle for the iPhone as customers trade in their gadgets for the newest model. We received more AI-related headlines around Apple late Friday. Bloomberg reported , citing people familiar with the matter, that the tech giant has renewed talks with Microsoft -backed startup OpenAI about integrating its technology into the upcoming iPhone's operating system. Apple remains in conversation with Alphabet -owned Google about a potential AI deal, Bloomberg also reported. The Club is waiting until Apple's annual developer conference in June before speculating too much on management's AI strategy. (Jim Cramer's Charitable Trust is long AAPL, GOOGL and MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

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A longtime Apple skeptic upgraded the iPhone maker, sending the struggling Club stock higher in Monday's session. Perhaps counterintuitively, Jim Cramer is not willing to celebrate the call just yet.