We recently published a list of Top 10 AI News Everyone is Talking About. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against other top AI news everyone is talking about.
Jim Cramer in a latest program on CNBC talked about the ongoing “rebellion” against the data center and the impact of tariffs on the broader market. Cramer said that data centers have been a key story in the stock market for months but now it’s losing steam due to a variety of factors. He also mentioned the weakening economic indicators.
“I know these tariffs have people on edge. Consumer confidence indicators have just plummeted. Interest rates are sinking for fear of an economy gone soft. The key 10-year Treasury yield is back to where it was in mid-December when many thought we were looking at many more rate cuts than we’ve gotten. We have had to put rate cuts talk on hold. Now it’s right back because there’s a newfound paralysis—too many things happening at once, scaring people.”
Cramer said that the “seeds of doubt” about data center chip demand were sown following the launch of DeepSeek and the market is still reeling from its effects.
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For this article we picked 10 AI stocks the market is buzzing about these days. With each stock, we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A wide view of an Apple store, showing the range of products the company offers.
Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
Erik Woodring from Morgan Stanley said in a latest program on CNBC that Apple’s earnings were better than feared but China remains a key near-term challenge for the company. The analyst said Apple Inc (NASDAQ:AAPL) needs upgrade cycles for the company to come up to his bull thesis.
“Chinese consumers are looking for Apple Inc (NASDAQ:AAPL) Intelligence, but they can’t have Apple Intelligence. If they can’t have Apple Intelligence, they aren’t upgrading their iPhones. That means not upgrading leads to iPhone revenue declines. I think that is the challenge Apple faces. What we did not hear last night is any real concrete timeline for when Apple Inc (NASDAQ:AAPL) Intelligence will come to China. We know it will support Simplified Chinese starting in April, which is a good step forward. But, Scott, you need Apple Intelligence in China. Consumers in that market want it, and until they get it, China faces a challenge.”
Apple Inc (NASDAQ:AAPL) results were helped by Services revenue in the latest quarter, but the key challenges haunting the company remain as they were. Many analysts believe just a few AI apps would not be enough to trigger a broader upgrade cycle for iPhone. Apple Inc (NASDAQ:AAPL) is dealing with currency headwinds as the stronger US dollar is expected to reduce top-line growth by 2.5% next quarter. For Q2 FY2025, management expects overall revenue to grow in the low to mid-single digits. Apple Inc (NASDAQ:AAPL) stock is trading at a premium valuation, with a price-to-earnings ratio of 39-40x, a price-to-free-cash-flow ratio of 33-34x, and a PEG ratio exceeding 3x. Upcoming quarters would be difficult for Apple and its current valuation is not justified.
Tsai Capital stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:
“We initiated our investment in Apple Inc. (NASDAQ:AAPL) in 2016 and elevated it to a core holding in 2018, the same year the company introduced its redesigned 13-inch and 15-inch MacBook Pro models. Under Tim Cook’s visionary leadership, Apple has consistently redefined innovation in hardware and software.
The September 2024 launch of the iPhone 16, with its groundbreaking AI capabilities, including enhanced image generation tools, marks another inflection point. We believe this transformative device is the foundation for an AI-driven supercycle and could entice approximately 100 million consumers to upgrade, reinforcing Apple’s leadership in the industry.
Today, Apple’s ecosystem spans over two billion active devices, supported by a rapidly-growing base of subscription services. This strategy has helped to turbocharge customer engagement and spending. In the most recent fiscal year, which ended in September 2024, Apple’s high-margin services division accounted for 39.3% of total gross profits, up from 32.8% just two years ago.
Apple’s financial footing remains exceptional, with approximately $50 billion in net cash and marketable securities. Looking ahead, we expect earnings-per-share growth to outpace revenue growth, driven by margin expansion and continued share buybacks.”
Overall, AAPL ranks 5th on our list of top AI news everyone is talking about. While we acknowledge the potential of AAPL as investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. 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.
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Disclosure: None. This article is originally published at Insider Monkey.