4. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
10-year Revenue CAGR: 8.03%
Apple Inc. (NASDAQ:AAPL) is a prominent American multinational technology company and is known for its groundbreaking consumer electronics, software, and services. The company first gained recognition with the launch of its Apple I personal computer.
Over the years, the company has transformed into one of the world’s most valuable brands, renowned for its flagship products such as the iPhone, iPad, Mac, Apple Watch, and Apple TV. In addition to its hardware, it offers a range of digital services, including the App Store, Apple Music, Apple TV+, iCloud, Apple Pay, and AppleCare. It is fourth on our list of the best beginner stocks to buy now.
Apple (NASDAQ:AAPL) has long been a significant player in the technology sector, and it is set to build on its position with an ambitious push into generative AI. While AI has been part of the company’s ecosystem for years, through the Siri virtual assistant, it is ready to better its AI capabilities with the upcoming launch of Apple Intelligence.
The new suite of features, expected within the year, will introduce a refreshed Siri interface and offer functionalities such as email summarization, content rewriting in various tones, and phone call transcriptions. Future updates will include integration with OpenAI’s ChatGPT, which further expands its AI capabilities.
Apple (NASDAQ:AAPL) has been integrating AI accelerators into its M-series processors from the start, which positions the company uniquely in the tech landscape. By making Apple Intelligence compatible with all Apple Silicon Macs, iPads with M-series processors, Vision Pro, iPhone 15 Pro, and future iPhones, the company will likely possess the largest base of AI-capable devices. Its devices, powered by the M-series and A17 Pro processors, will possibly be able to handle complex AI tasks directly on the device rather than relying on cloud computing.
In addition to these advancements, the company remains a high-margin leader in the tech industry. In the third quarter, it saw a 5% increase in net sales, reaching $85.8 billion. This growth was fueled by a 14% rise in services revenue and substantial iPhone sales, which totaled $39.3 billion.
With its continued innovation in AI and robust financial performance, the company is well-positioned for sustained growth and market leadership. The expansion of AI functionalities across its product lineup and impressive sales figures highlight the company’s ongoing potential and strategic direction.
In the second quarter, 184 hedge funds had stakes in Apple (NASDAQ:AAPL), with total positions worth $124.175 billion. With 400 million shares worth $84.248 billion, Warren Buffett’s Berkshire Hathaway is the most prominent shareholder in the company, as of June 30.
Baron Opportunity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 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.”
