NEW YORK (Reuters) -Billionaire hedge fund manager Daniel Loeb sees room for Apple's ( AAPL ) stock price to climb, especially if the technology company successfully harnesses artificial intelligence for its iOS mobile operating system.

"Despite the stock's recent strong appreciation, we see room for significant upside ahead as the magnitude of this new AI opportunity surprises," Loeb wrote to his investors in a letter seen by Reuters on Friday. Third Point built a position in Apple ( AAPL ) in April, Loeb wrote.

Loeb, whose firm oversees some $11 billion in assets, wrote that Apple ( AAPL ) was already one of the firm's top five winners during the second quarter when its TP Offshore Fund gained 1.8%. During the first half, the fund returned nearly 10%.

Apple ( AAPL ), Loeb wrote, had been "under-owned" by institutional investors who feared the company might become an "AI loser." But Third Point has a different view, noting "AI-related demand could drive a step change improvement in Apple's ( AAPL ) revenue and earnings over the next few years."

Demand for newer iPhones will grow as Apple Intelligence features will not be backwards-compatible and Apple's ( AAPL ) App Store will likely be the primary distribution platform for new consumer-focused AI apps, the letter said.