We recently compiled a list of the 20 Trending AI Stocks on Latest Analyst Ratings and News. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against the other trending AI stocks.
Artificial intelligence (AI) stocks have taken a beating over the past few days, merely weeks after a broader market selloff in the technology sector that shook the entire finance industry. Shares of several prominent AI companies like have all witnessed high single digit drops in the space of just 24 hours. The NVIDIA selloff has wiped nearly $300 billion off the market value of the company. The growth-heavy NASDAQ Composite has registered a more than 3% drop in a single day of trading. AI valuations are bloated, no doubt, and the recent bear market has erased nearly $1 trillion in value from AI firms in just a few hours.
Read more about these developments by accessing 33 Most Important AI Companies You Should Pay Attention To and 20 Industrial Stocks Already Riding the AI Wave.
The concerns around top AI chipmaker stem from recent reports that authorities in the US are growing uneasy about the near monopoly of the firm in terms of GPU provision. The stock’s outperformance in this regard has delighted investors – the chipmaker is doing business with tech giants like Google, Amazon, Microsoft, and Meta – but it has invited the ire of the Justice Department. The department is speculated to be in the process of sending a subpoena to the company, binding the business to provide certain information, in relation to an antitrust case. The purchase of Run:ai, an Israeli firm specializing in GPU orchestration software, back in April is believed to be one of the bones of contention between the AI chipmaker and the government.
Macro developments are also weighing on the AI stocks in the near term. Commodity markets around the world are absorbing less than impressive growth numbers from China, impacting prices of copper and rare earths. Copper and rare earth metals are extensively used in AI devices, from chips to batteries. Lates US manufacturing data also paints a not so good picture for factories. According to authorities, US manufacturing witnessed a further decline in new orders and rise in inventory during August, even as manufacturing overall contracted at a modest pace. In addition to these factors, new investment notes on AI from JPMorgan and BlackRock, questioning the ROI on ballooning AI capex, have also grabbed media headlines.
Read more about these developments by accessing Billionaire Stan Druckenmiller Is Betting On AI Infrastructure, Tobacco and Industrial Stocks and 10 Tech Stocks to Monitor Amid Market Volatility According to Bernstein Analyst.
Our Methodology
For this article, we selected AI stocks based on latest news and analyst ratings. These stocks are also popular among hedge funds. 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 275% since May 2014, beating its benchmark by 150 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 Holders: 184
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. The company is planning to launch the next generation of the iPhone lineup in the coming days. This annual event has received more attention than usual around the globe because the tech giant is expected to unveil new AI features for these phones. Wall Street analysts have predicted that these features would not be backward compatible and would thus lead to a major upgrade cycle in iPhone. Since 50% of the total revenue base of the firm is based around iPhones, investors in the company are eagerly waiting for the launch event. Lagging iPhone sales in recent years have slowed the revenue growth for Apple, leading to concerns around the EPS trajectory as well.
Apple Inc. (NASDAQ:AAPL) is trading at a forward PE of 32, which indicates that much of the AI hype has already been priced into the stock. This is because peers in the tech world, who are also spending massively on AI and have AI-related products in the pipeline, are trading at lower multiples. For example, Google is trading at a forward PE of 21, while Meta is trading at a forward PE of almost 25. Percentage figures highlight this data even better. Apple stock is trading nearly 50% higher in forward PE data compared to Google, and 40% higher than Meta.
Overall AAPL ranks 2nd on our list of the trending AI stocks to buy. 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 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.
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Disclosure: None. This article is originally published at Insider Monkey.