5. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Investors in Q2 2024: 184
GS’ Number Of Funds: 43
Apple Inc. (NASDAQ:AAPL) is the biggest and most valuable consumer technology company in the world. Roughly 52% of its nine month revenue ending June, or $155 billion out of $296 billion came from the sales of its iPhone smartphone lineup. This means that the phone is key to Apple Inc. (NASDAQ:AAPL)’s hypothesis and is baked into the share price. This is based on investor belief that Apple Inc. (NASDAQ:AAPL)’s design strengths and robust ecosystem allow the firm to rely on its user base of roughly 1.5 billion users as of 2023 regularly upgrading its smartphones. This ensures that the iPhone continues to bring in billions of dollars in revenue annually. Apple Inc. (NASDAQ:AAPL) benefits from its world class design and engineering facilities which have also allowed it to reduce dependence on third party suppliers for key components such as smartphones and notebook processors. Apple Inc. (NASDAQ:AAPL)’s $61.5 billion in cash and equivalents also means that it can splurge on developing new products to maintain its competitive edge.
Baron Funds mentioned Apple Inc. (NASDAQ:AAPL) in its Q2 2024 investor letter. Here is what the firm said:
“Recent Activity This quarter we re-initiated a position in Apple Inc., a leading technology company known for its innovative consumer electronics products like the iPhone, MacBook, iPad, and Apple Watch. Apple is a leader across its categories and geographies, with a growing installed base that now exceeds 2 billion devices globally. The company’s attached services – including the App Store, iCloud, Apple TV+, Apple Music, and Apple Pay – provide a higher margin, recurring revenue stream that both enhances the value proposition for its hardware products and improves the financial profile. Apple now has well over 1 billion subscribers paying for these services, more than double the number it had just 4 years ago. The increasing services mix has led to healthy operating margin improvement, providing more free cash flow for Apple to reinvest in the business and to distribute to shareholders. Throughout its 48-year history, Apple has successfully navigated and capitalized on major technological shis, from PCs to mobile to cloud computing. We believe the company’s leading brand and device ecosystem position it to do equally well in the AI age, and this was the driver of our decision to re-invest. “Apple Intelligence” – the AI strategy unveiled at Apple’s recent Worldwide Developer Conference – leverages on- device AI and integrations with tools like ChatGPT to enhance user experiences across its ecosystem. The AI suite enables users to create new images, summarize and generate text, and use Siri to perform actions across their mobile applications, all while maintaining user privacy and security. We think Apple Intelligence can drive accelerated product upgrade cycles and higher demand for Apple services. The combination of growth re-acceleration, increasing services contribution, and thoughtful capital allocation should continue driving long-term shareholder value.”
