1. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 158
Apple Inc. (NASDAQ:AAPL) is a tech giant known for its innovative consumer electronics products. Its popular products include iPhones, Mac computers, iPad tablets, and wearables like Apple Watches and AirPods. It also provides an ecosystem of services like app stores, streaming services, and cloud solutions, which enhance the user experience across its entire product line.
Recent years have witnessed a slowdown in iPhone sales growth. But the company’s investments in AI, showcased by the recent introduction of Apple Intelligence, will reignite growth. Apple Intelligence, which is a suite of AI-powered tools and services integrated into the iPhone, assists users with tasks like email composition, notification summarization, and appointment scheduling.
Following its launch of Apple Intelligence, Rosenblatt Securities maintained a Buy rating for Apple Inc. (NASDAQ:AAPL) with a $262 target price on January 27. This was despite concerns about disappointing iPhone performance in the December quarter, echoed by UBS. While Apple Intelligence and upcoming software updates hold promise for future growth, intense competition from Chinese brands like Huawei, which offer advanced AI and aggressive pricing, poses a significant challenge. The company experienced a 7.7% sales drop in China in FY24. This decline came from competition from domestic brands and a sluggish Chinese economy. To mitigate this, it’s shifting its focus from hardware sales towards revenue streams like its App Store services.
Mar Vista Strategic Growth Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL) stock was strong in the quarter as investors viewed the company’s generative AI roadmap and iPhone 16 product cycle positively. The market was reminded of the strength of the Apple ecosystem as management demonstrated how generative AI solutions would be integrated into its iOS 18 operating system, which was broadly released in the iPhone 16 late in calendar Q3. We believe Apple’s generative AI-enabled products should spur a meaningful iPhone upgrade cycle and create new avenues of monetization through its app store and advertising offerings. We believe this will support intrinsic value growth that will range between high single digits and low double-digits over our investment horizon.”
As we acknowledge the growth potential of Apple Inc. (NASDAQ:AAPL), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
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