5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is one of those tech companies that needs no introduction, given its immense fame and contributions in the tech space. It is considered to be one of the best American investments because of its leading role in tech and its vast growth across the globe.
Investors are interested in Apple Inc. (NASDAQ:AAPL) not only because of its tech products but also because it has diversified its offerings to include attached services, such as the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay. Through these services, Apple Inc. (NASDAQ:AAPL) has ensured that it has a recurring revenue stream providing a higher margin. Over 1 billion subscribers pay for Apple Inc.’s (NASDAQ:AAPL) attached services in 2024, which is almost double the amount of subscribers in 2020.
Considering the fact that Apple Inc. (NASDAQ:AAPL) has a distinct and market-leading brand and device ecosystem, investors believe that the company is well-positioned to benefit from the rise of AI. Another catalyst influencing this opinion and Apple Inc.’s (NASDAQ:AAPL) growth is Apple Intelligence, a newly unveiled offering announced at the company’s Worldwide Developer Conference. This product is built to enhance user experience for Apple Inc.’s (NASDAQ:AAPL) customers by integrating AI into Apple devices. Many investors now consider Apple Intelligence to be the next big growth driver for both revenue and product demand.
Apple Inc. (NASDAQ:AAPL) was spotted in the 13F holdings of 184 hedge funds in the second quarter, with a total stake value of $124.2 billion.
Baron Funds said the following about Apple Inc. (NASDAQ:AAPL) in its second-quarter 2024 investor letter:
“This quarter we re-initiated a position in Apple Inc. (NASDAQ:AAPL), a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago. The increasing services mix has led to healthy operating margin improvement, providing more free cash flow for Apple to reinvest in the business and to distribute to shareholders. Throughout its 48-year history, Apple has successfully navigated and capitalized on major technological shifts, from PCs to mobile to cloud computing. We believe the company’s leading brand and device ecosystem position it to do equally well in the AI age, and this was the driver of our decision to re-invest. “Apple Intelligence” – the AI strategy unveiled at Apple’s recent Worldwide Developer Conference – leverages on[1]device AI and integrations with tools like ChatGPT to enhance user experiences across its ecosystem. The AI suite enables users to create new images, summarize and generate text, and use Siri to perform actions across their mobile applications, all while maintaining user privacy and security. We think Apple Intelligence can drive accelerated product upgrade cycles and higher demand for Apple services. The combination of growth re-acceleration, increasing services contribution, and thoughtful capital allocation should continue driving long-term shareholder value.”
