10 AI Stocks on Investors’ Radar In January 2025

4. Apple Inc (NASDAQ:AAPL)

Number of Hedge Fund Investors: 158

Andy Swan from LikeFolio‬ explained during a latest program on Schwab Network why he believes Apple Inc (NASDAQ:AAPL) had a strong holiday shopping season:

“Once we saw the September keynote and the reaction that consumers had to that keynote event, we knew that Apple Inc (NASDAQ:AAPL) was setting up for a really good holiday season. And so far, you know, everything that we’re seeing points to that being true. Web visits for Apple Inc (NASDAQ:AAPL) are up year-over-year by a pretty decent margin, but when we break it down by product category and look, you know, at the overall demand for each of these types of products, you really get the sense that Apple Inc (NASDAQ:AAPL), going into the Christmas holiday gift-giving season, just really has something for everyone on your list. If you want to spend $499, you can get an iPad Mini that is extraordinarily popular. The pencil looks like it’s getting added on at a tremendous clip, which is a high-margin item for Apple Inc (NASDAQ:AAPL). You know, if you want to spend $129, you can get AirPods for your friend or for your niece or whatever it is, and people are doing so in droves. You know, iPad searches up 26%, AirPods and iPhone up 15-16%. The only real whiff we see on the list is the Apple Inc (NASDAQ:AAPL) Watch.”

Apple Inc (NASDAQ:AAPL) is desperately in need of new catalysts. The company’s revenue in China fell 8% in fiscal year 2024, following a 2% decline the previous year. The Chinese market accounts for about 15% of Apple’s total revenue, so this downtrend cannot be ignored.

Investors had hopes from the Wearables, Home, and Accessories segment, but so far its performance has been weak. Vision Pro faces tough competition from Meta’s $500 Quest and the more affordable Quest 3S, making it hard to justify its $3,500 price tag. The failure of Apple’s HomePod, unable to compete with Amazon’s and Google’s lower-priced offerings, further highlights the challenges in this market.

Apple’s iPhone 16 has not shown promising growth prospects yet and investors are still in a wait-and-see mode on the AI platform.

While the company is projected to achieve 9.5% EPS growth this fiscal year and 12.3% growth in the next, much of this growth is already priced in, as the stock trades at nearly 30 times the expected EPS for the fiscal year ending September 2026.

Parnassus Growth Equity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:

“Apple Inc. (NASDAQ:AAPL) shares rose during the quarter, making our underweight position a relative detractor. Investors reacted positively to the new iPhone 16 lineup and its advanced features, including generative artificial intelligence, greater durability and increased processing power.”