Insider Monkey recently analyzed billionaire Druckenmiller’s latest Q1’2024 portfolio to see which AI stocks the billionaire was buying. Apple Inc (NASDAQ:AAPL) is part of the 10 Best AI stocks to Buy According to Billionaire Stanley Druckenmiller.
But the interesting question to answer is: Is Apple really the best AI pick of Druckenmiller?
Billionaire Stanley Druckenmiller surprised the market when he revealed a new take in Apple Inc (NASDAQ:AAPL) in his first quarter holdings data. Duquesne Capital bought a $19.6 million stake in Nvidia in the March quarter. After dumping Apple shares in the early 2011, Stanley Druckenmiller never took interest in the stock which remained one of the favorites of hedge funds throughout these years. But his latest move indicates the value investor is expecting a new bull run in Apple Inc (NASDAQ:AAPL) which is struggling to take off with its AI plans. Apple Inc (NASDAQ:AAPL) shares are down about 1% year to date. All eyes are now on Apple Inc’s (NASDAQ:AAPL) Worldwide Developers Conference as investors believe Apple Inc (NASDAQ:AAPL) will reveal some blockbuster AI plans in the event.
Does Apple Have Any AI Catalysts?
The closet Apple Inc (NASDAQ:AAPL) has come to any meaningful AI offering is its new plan to integrate ChatGPT in its iOS 18. Wedbush analyst Dan Ives, a notable Apple Inc (NASDAQ:AAPL) bull, called the possible deal between Apple Inc (NASDAQ:AAPL) and OpenAI a “golden goose” for Apple Inc (NASDAQ:AAPL) and Tim Cook. Ives reiterated a Buy rating on Apple Inc (NASDAQ:AAPL) stock with a $250 price target.
Risks Around Apple Stock
Apple Inc’s (NASDAQ:AAPL) list of risks is long. Apple Inc (NASDAQ:AAPL) has faced consecutive quarters of revenue declines as its iPhone business, Apple Inc’s (NASDAQ:AAPL) bread and butter so far, continues to face growth challenges amid rising competition in China and customers’ lack of enthusiasm to buy new iPhones. Major stakeholders like Warren Buffett are also starting to cut their stakes in Apple Inc (NASDAQ:AAPL). To turn things around when it comes to the stock price, Apple Inc (NASDAQ:AAPL) recently announced a historic a $110 billion stock buyback program. But that didn’t move the needle much for Apple Inc (NASDAQ:AAPL) shares.
Valuation and Comparison with Peers
Apple Inc (NASDAQ:AAPL) is trading at around 29 times earnings. Estimates suggest Apple Inc (NASDAQ:AAPL) expects to make $6.53 a share in FY2024 on about $385.8 billion in sales, while EPS in fiscal 2025 is expected to come in at $7.13. When compared to peers like Microsoft, which are growing at a much faster rate and have their AI roadmap all in place, Apple Inc (NASDAQ:AAPL) stock looks overvalued according to many analysts.
iPhone Demand Expected to Remain Weak
Unless Apple Inc (NASDAQ:AAPL) pulls a miracle or out-of-this-world innovation, iPhone demand isn’t expected to rebound anytime soon due to a plethora of competitors which are making cheaper but quality smartphones, and rising inflation which is hurting consumer buying power. KeyBanc Capital Markets recently said in a report that iPhone demand in April was also “soft.”
Insider Monkey’s database shows that 131 out of 933 elite money managers had stakes in Apple Inc (NASDAQ:AAPL), down from 134 funds in the prior quarter.
The London Company Large Cap Strategy stated the following regarding Apple Inc. (NASDAQ:AAPL) in its first quarter 2024 investor letter:
“Reduced: Apple Inc. (NASDAQ:AAPL) – Reduction reflects strong performance in 2023 and resulting elevated valuation. We believe the outlook for AAPL remains strong with slow growth in iPhone (now #1 global market share) and faster growth in the higher margin services business. R&D will continue to drive new products and AAPL now has over 2 billion installed devices around the world. While near term earnings expectations appear reasonable, we felt it was prudent to reduce the position size based on risks to valuation.”
Is Apple The Best AI Stock Pick of Stanley Druckenmiller?
Apple is not the best AI stock pick of billionaire Druckenmiller.
Apple ranked 4th in our list of Stanley Druckenmiller’s 10 Best AI Stock Picks. Click to see 3 AI Stocks in Druckenmiller Portfolio Better than Apple
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