Apple Inc. (AAPL) Maintained at ‘Buy’ as iPhone 16e and AI Investments Boost Optimism

We recently compiled a list of the 10 AI Stocks Gaining Momentum Right Now. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against the other AI stocks.

Last month, a Chinese artificial intelligence startup called DeepSeek sparked a broad market sell-off in the tech world. Investors became increasingly skeptical about tech giants’ massive spending needs, questioning if AI development is possible with lower costs and less advanced hardware.

Distillation, in particular, is the underlying issue in Silicon Valley that eventually led to the entire show. The distillation process allows new AI models to quickly and cheaply learn from existing ones, having the potential to reshape the AI industry.

READ ALSO: 10 Buzzing AI Stocks Dominating Headlines and 10 AI Stocks Taking Wall Street by Storm

That’s right, distillation can allow even a small team with virtually no resources to make an advanced AI model. While DeepSeek isn’t the one who invented this process, it did open up all its possibilities to the AI world.

“This distillation technique is just so extremely powerful and so extremely cheap, and it’s just available to anyone. We’re going to see so much competition for LLMs. That’s what’s going to happen in this new era we’re entering.”

-Databricks CEO Ali Ghodsi.

As reported by CNBC, the distillation process allowed researchers at Berkeley to recreate OpenAI’s reasoning model for $450 in 19 hours last month. In another instance, researchers at Stanford and the University of Washington created their reasoning model in just 26 minutes, and that too, by using less than $50 in compute credits. The startup Hugging Face has also managed to create OpenAI’s newest and flashiest feature, Deep Research, as part of a 24-hour coding challenge.

“Open source always wins in the tech industry. You cannot beat the momentum that a successful open-source project is able to actually generate.”

-Arvind Jain, CEO of Glean, a company that makes an AI-powered search engine for enterprises.

Even OpenAI thinks that it has been on the wrong side of history.

“Personally I think we have been on the wrong side of history here and need to figure out a different open-source strategy”.

-OpenAI CEO Sam Altman

For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds. The hedge fund data is as of Q4 2024.

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).

Is Apple Inc. (AAPL) the Best Magic Formula Stock for 2025?

A wide view of an Apple store, showing the range of products the company offers.

Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 166

Apple Inc. (NASDAQ:AAPL) is a technology company. One of the biggest analyst calls on Wednesday, February 26, was for Apple Inc. (NASDAQ:AAPL). Analyst Mike Ng of Goldman Sachs maintained a “Buy” rating on the stock and retained the price target of $294.00. According to the firm, the strategic launch of the iPhone 16e, coupled with the significant US investments Apple has promised to build Apple Intelligence infrastructure, data centers, and more, has led to an optimistic rating for the stock.

In particular, the firm highlighted how the iPhone 16e, an entry-level phone boasting the A18 chip, Apple Intelligence, extraordinary battery life, and a 48MP 2-in-1 camera system, comes with a price increase and internalized modem which are anticipated to boost profit margins. The lack of lead time on the phone further reflects the strong supply chain management and availability, a positive sign for its sales.

“We’re encouraged by the role that iPhone 16e plays as an entry-level phone in the iPhone portfolio and believe that the price increase (relative to iPhone SE3) and internalized modem should be supportive of margins. There are no lead times on iPhone 16e.”

Overall AAPL ranks 4th on our list of the AI stocks gaining momentum right now. While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that some 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.

READ NEXT: 20 Best AI Stock To Buy Now and Complete List of All AI Companies Under $2 Billion Market Cap.

Disclosure: None. This article is originally published at Insider Monkey.