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Apple’s stock climbed 2% on Friday, bolstered by an optimistic forecast that sparked speculation about a potential rebound in iPhone sales, despite ongoing challenges from fierce competition and a lack of AI enhancements in the crucial Chinese market.

As the world’s most valuable company, Apple (AAPL.O) stands to gain more than $81 billion in market value, lifting its total to approximately $3.573 trillion if the gains hold. The tech giant has been addressing investor concerns regarding iPhone demand, which have arisen from a slow introduction of its AI-driven Apple Intelligence features. Apple predicts a revenue increase in the low to mid-single digits for the current quarter.

The positive outlook indicates a revival in interest for the iPhone 16 series, which debuted last September without many of the planned AI features. Recent updates, however, have introduced integrations like ChatGPT, which could enhance user appeal. “There was significant apprehension ahead of Apple’s first-quarter earnings report, but the company managed to turn that sentiment around,” said Barton Crockett, an analyst at Rosenblatt.

While competitors like Microsoft (MSFT.O) and Alphabet (GOOGL.O) have aggressively invested billions into AI advancements, Apple has opted for a more conservative stance, aiming to harness the technology to boost device sales without overspending. “With investors closely monitoring how AI investments will translate to actual revenue, Apple’s results have provided a sense of reassurance,” remarked Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Nevertheless, China’s challenges loom large for Apple. The company has yet to establish a local partner to deploy its AI features, allowing domestic competitors like Huawei to erode its market share with more eye-catching devices. Apple experienced an 11% drop in sales in China during the last quarter of 2024, following a slight decline in the previous period.

Analysts at J.P. Morgan believe that recent government stimulus measures could help Apple mitigate its sales downturn. In the wake of the positive forecast, at least 12 analysts raised their price targets for the stock. Apple’s shares rose around 30% last year, in contrast to a 65% surge for Meta (META.O), the standout performer in the tech sector, while Microsoft (MSFT.O) saw a modest 12% increase.

Currently, Apple’s 12-month forward price-to-earnings ratio stands at 31.12, surpassing Microsoft’s 29.2 and Meta’s 26.7.