Needham&Company analysts increased their price target for Apple (NASDAQ: AAPL) to $260 from $220 in a note Wednesday, citing the company's hefty $110 billion share buyback plan and the potential of an advertising business. The firm maintained a Buy rating on the stock.

Needham acknowledges Apple's current focus on buybacks comes "at a time when other big tech companies are spending $50-$100B on GenAI infrastructure." However, they express concern about Apple's long-term revenue growth, stating, "AAPL's single-digit rev growth rate feels increasingly at risk to us" over a 3-year time frame.

Needham believes Apple should enter the advertising market, similar to Amazon (NASDAQ: AMZN). The investment firm argues, "Advertising is global and, at $966B total and $500B on mobile (eMarketer) in 2024, both are larger than AAPL's FY24E revs of <$400B."

They believe advertising's high margins "would drive margin expansion at AAPL without raising device prices."

The analysts calculate that "selling CTV ads on AppleTV+ alone would add 140 b.p. to rev growth, thereby doubling AAPL's consensus rev growth of just 1% in FY24." Furthermore, they suggest that adding ads to the App Store "would accelerate rev growth even faster."