Cramer’s Morning Thoughts: 20 Stocks to Watch

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2. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Investors: 184

According to the latest Morning Thoughts post, Apple Inc. (NASDAQ:AAPL) analysts are offering mixed opinions on the new AI-ready iPhone 16. JPMorgan pointed to the longer lead times as an indicator of strong demand, while Barclays took a more cautious view, citing less optimistic supply chain checks.

“Once again, the Apple analysts were all over the place with JPMorgan saying lead times for the new AI-ready iPhone 16 suggest healthy demand while Barclays sees more muted checks.”

Apple Inc. (NASDAQ:AAPL) presents a strong investment case due to its impressive growth in services, advancements in artificial intelligence (AI), and a solid product lineup, despite facing challenges in China. In Q2 2024, Apple Inc. (NASDAQ:AAPL)’s services segment, which includes the App Store, iCloud, and Apple Music, generated $23.9 billion in revenue, reflecting a 14% increase from the previous year. This growth is driven by over 1 billion paid subscriptions, highlighting a stable, high-margin revenue stream that is a positive sign for Apple Inc. (NASDAQ:AAPL)’s long-term prospects.

Apple Inc. (NASDAQ:AAPL) is also making strides in AI integration, with significant announcements expected at its upcoming WWDC event that could enhance its AI capabilities and provide new growth opportunities. Although iPhone sales fell by 10.5% in Q2 2024 due to tough year-over-year comparisons, demand remains strong in key markets like India and Europe, helping to balance slower sales in China. The launch of upcoming products like the iPhone 16 and Vision Pro is anticipated to further drive growth into 2025.

Additionally,Apple Inc. (NASDAQ:AAPL) is dedicated to returning value to shareholders, distributing $27 billion through dividends and share buybacks in Q2. This is supported by a $110 billion share repurchase program and a 4% increase in dividends.

Parnassus Growth Equity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter:

Apple Inc. (NASDAQ:AAPL) gained but detracted from relative performance due to our underweight. While the company’s overall and iPhone revenues declined year over year, the unveiling of an upgraded iPad Pro and iPad Air boosted investor sentiment. In particular, the introduction of generative AI features allayed concerns that Apple was not keeping pace with competitors.”

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