3. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 184
Hundreds of millions of people use Apple Inc.’s (NASDAQ:AAPL) hardware and software services to access a wide variety of internet content, making it one of the best stocks for internet content investors. Millions of people access the internet via the 1.8 billion Apple Inc. (NASDAQ:AAPL) gadgets that are in use globally. Apple Inc. (NASDAQ:AAPL) is an internationally recognized supplier of internet content due to its streaming service, Apple TV+, Apple Podcasts, and other media offerings.
In fiscal Q3 2024, the California-based tech behemoth revealed Apple Intelligence, an AI-powered personal system for its new iPhones, which might spark a supercycle of iPhone upgrades. The company’s $85.8 billion in revenue was up 5% year over year as iPhone sales reached $39.3 billion, while Mac revenue increased 2% to $7 billion. The company’s economic moat is supported by AAPL’s solid financial history, which includes improvements in net income and revenue over the preceding ten years.
Morningstar analysts increased their estimate of the company’s fair value from $170 to $185 based on an increased projection of iPhone revenue. Experts predict that the iPhone market will expand significantly in 2025 and 2026 as a result of Apple’s increasing artificial intelligence capabilities. However, considering that the present valuation accounts for an unsustainable 20% increase in iPhone revenue in fiscal 2025 owing to difficulties in China and slow upgrade cycles, they still believe the company’s stock is expensive.
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.”
Warren Buffett’s Berkshire Hathaway is the largest stakeholder in the company from among the funds in Insider Monkey’s database. It owns 400,000,000 shares worth $84.25 billion as of Q2.
