12. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders In Q2 2024: 184
Category: Most popular with HFs and underweight among mutual funds
Apple Inc. (NASDAQ:AAPL) is the world’s most valuable consumer technology company. In today’s AI wave, this has allowed the firm to retain its valuation as software companies with enterprise AI exposure falter. Apple Inc. (NASDAQ:AAPL)’s shares are up 27% year to date and have outpaced Microsoft’s 12.6% gains. This is because the latter’s shares have lost 10.5% since July as Wall Street ponders the firm’s ability to quickly monetize AI. On the flip side, Apple Inc. (NASDAQ:AAPL)’s stock has avoided these drops and is flat since July. iPhone sales form the backbone of its hypothesis, with $155 billion of the firm’s $296 billion nine month revenue ending in July coming from the smartphone. Investors bet on Apple Inc. (NASDAQ:AAPL)’s 1.5 billion users regularly upgrading their devices, and any weakness also leads to tailwinds for the stock.
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.”
