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The past year has been an underwhelming one for Apple (NASDAQ: AAPL) investors, as shares of the technology giant have appreciated only 13% as compared to the Nasdaq-100 Technology Sector index's gains of 24% during the same period. However, a closer look at the recent stock-price action indicates that the tech giant is regaining its mojo.

Apple stock has jumped 33% in the past three months. This impressive rally can be attributed to Apple's long-awaited move into artificial intelligence (AI), as well as a turnaround in the smartphone market's fortunes. However, will these two catalysts be enough to help Apple stock sustain its recent rally and deliver healthy gains over the next year?

Let's find out.

AI could give Apple a nice boost

Market research firm IDC recently released smartphone shipment data for the second quarter of 2024. It reported a 6.5% year-over-year increase in smartphone shipments for the quarter. Apple was the second-largest player in the smartphone market last quarter with a market share of 15.8%. The company's shipments, however, increased only 1.5% year over year, which led to a small drop in its market share from the year-ago period when it had a 16.6% market share.

However, the drop in Apple's shipments last quarter is on expected lines as the current generation of its iPhones is close to a year old now. The company is expected to launch an AI-enabled generation of smartphones in a couple of months, and that could give its shipments a nice boost.

Earlier this year, the tech giant took the wraps off Apple Intelligence, which is its suite of AI features that will be embedded into iPhones, iPads, and MacBooks. The AI tool will give users the ability to summarize, proofread, and even create different versions of the same text. Additionally, Apple Intelligence plans to put time-sensitive messages at the top of users' inboxes to help them focus on the more important things.

Another key feature of Apple Intelligence is its ability to convert audio recordings into text-based summaries and transcripts. Apple will be offering its AI features on iPhone 15 Pro models, iPads, and MacBooks with the M1 or more powerful chips. In simpler words, Apple's users will need to upgrade to its latest devices to use its AI solutions.

This is why the iPhone 16 models could see a significant bump in sales, especially considering that the entire lineup is expected to be AI-enabled. A report from Bloomberg points out that there could be a 10% increase in Apple's iPhone shipments this year thanks to AI. This, however, is not the only way Apple could benefit from AI adoption.

IDC points out that Apple's personal computer (PC) shipments jumped almost 21% from a year ago to 5.7 million units in the second quarter. The tech giant's growth significantly outpaced the 3% growth in overall PC shipments during the quarter. This trend could continue in the future as Apple is reportedly looking to refresh its MacBook lineup to support AI features.

So, Apple has a couple of solid growth drivers for the coming year in the form of AI-enabled smartphones and PCs. Gartner estimates that a total of 295 million generative AI-powered smartphones and PCs could be shipped in 2024 as compared to just 29 million units last year. As such, there is a solid chance that Apple's growth could be better than the market's expectations over the coming year.

Analysts are expecting the stock to run higher

Analysts are expecting Apple to finish the current fiscal year, which ends in September, with $387.4 billion in revenue. That would be an increase of 8% from the prior year. Its revenue growth is expected to remain in the high-single digits in fiscal 2025 as well.

AAPL Revenue Estimates for Current Fiscal Year data by YCharts.

However, the significant jump in Apple's MacBook sales, the arrival of AI smartphones, and a potential improvement in its services revenue in case it decides to monetize the Apple Intelligence platform could help it grow at a faster pace than what analysts are forecasting in the next one year and beyond. All these reasons indicate why there has been an improvement in Apple's price targets of late.

Morgan Stanley lifted the price target on Apple stock to $273, which would translate into a 21% jump from current levels. Meanwhile, Loop Capital's $300 price target would translate into a 33% jump from where Apple stock is right now. The AI-related growth drivers indicate that Apple could indeed live up to the market's expectations and sustain its healthy stock-market momentum, which should translate into stronger gains in the coming year.

That's why investors will do well to continue holding Apple stock in their portfolios as it could have a better year ahead as compared to the previous one.

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Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool recommends Gartner. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.