Apple Shares Could Rise Almost 40% -- Here's Why

With tech stocks on the upswing, Credit Suisse has put out a list of of its top investment ideas, with Apple(AAPL - Get Report) taking one of the top spots in the hardware space.

Using a six-to-twelve month time frame, the investment bank had its analysts put forth its "high conviction ideas." Its top names combine strong recent financial performance and an appreciation in share price over the past year.

Analyst Kulbinder Garcha believes Apple shares could rise almost 40%, to a price of $140, thanks in part to taking away market share in the smartphone business (iPhone), tablet business (iPad) and computer business (Mac), as well as greater adoption of the iOS ecosystem.

In the most recent quarter, Apple sold 74.8 million iPhones, just below the Wall Street estimate of around 75 million and up just 0.2% year over year. It also shipped 16.1 million iPads, down 25% year over year. Mac unit sales declined in the quarter, down 4% year over year to 5.3 million units.

Apple shares have taken a hit in recent months, as concerns about stagnating iPhone sales have crept up, with investors wondering whether Apple's market share has peaked. As of the end of the fourth quarter, Apple had 18.7% of the smartphone market, down from 19.7% in the fourth quarter of 2014, according to research firm IDC. IDC noted smartphone makers Huawei, Lenovo and Xiaomi all increased their market share year over year.

A turnaround isn't expected this quarter, with Apple CEO Timothy D. Cook saying he thinks iPhone sales will decline in the upcoming quarter, which would be a first.

Both Cook and CFO Luca Maestri said they expected the second quarter would be the toughest year-over-year comparison because last year there was pent-up demand for the larger iPhone 6 and 6 Plus. Both also said economic conditions had severely weakened over the last year around the world, particularly in commodity-based economies, with Brazil, Russia, Turkey, Canada and Australia getting mentioned.

Sales of the popular device could pick up in the second half of the year, when Apple is expected to release a new iPhone. New versions of the iPad and Apple Watch are expected to come later this month. The new version of the iPhone is expected to be named the iPhone SE, according to several media reports.

Despite near-term concerns about the iPhone, Garcha believes the company's user base, which surpassed 1 billion active devices in fiscal 2015 (the first time Apple has disclosed such a figure), will continue to grow. Along with a "sustainable compute advantage," as well as a commitment to returning cash to shareholders, Apple shareholders should soon see multiple reasons for the stock to move higher.