We recently published a list of 10 Biggest AI Stories and Ratings Updates You Should Not Miss This Week. Since Apple Inc (NASDAQ:AAPL) ranks 5th on the list, it deserves a deeper look.
The Federal Reserve now expects just one rate cut in this year, and the market’s reaction to this development has been calmer-than-expected, showing investors are now paying little to no attention to what the Fed does and instead have their eyes focused on AI, which continues to push the markets higher. Tech companies, small and large, are continuing to roll out AI-focused products and solutions, while funds are pouring billions into AI. SoftBank has recently committed another $5 billion in AI investments for 5 companies ($1 billion each). A Wall Street Journal report cited SoftBank’s CFO, who said the bank’s chief Masayoshi Son was taking a “break from quarterly earnings meetings so he could focus on AI.”
In this backdrop it’s important to stay ahead of the curve and see what’s happening in the AI space.
In this article we will take a look at some of the biggest AI stock ratings updates and stories which can’t be missed. We focused on AI stocks that are popular among the smart money investors. 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).
Copyright: dennizn / 123RF Stock Photo
Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 150
Apple Inc (NASDAQ:AAPL) shares are trending as the company announced a slew of AI products and features at its much-awaited WWDC conference.
Wedbush’s Dan Ives also thinks Apple Inc (NASDAQ:AAPL) will be able to create an ecosystem around its AI offerings and Apple Inc (NASDAQ:AAPL) would see a $30 to $40 per share surge because of its AI products. Ives has a $275 price target on Apple Inc (NASDAQ:AAPL) shares.
Apple Inc (NASDAQ:AAPL) is trading at 27x its 2025 EPS estimate, which is still a high multiple given Apple Inc’s (NASDAQ:AAPL) 9.60% growth estimate for 2025 and 10.50% per-annum growth expected over the next five years. But if Apple can really execute its AI strategy well, the company can become the next favorite AI stock of the Street.
TF International Securities analyst Ming-Chi Kuo said in a fresh note that Apple has a competitive edge over others with its on-device AI.
“Consumers may find purchasing Microsoft’s AI PC confusing (calculating whether it reaches 40 TOPS before purchase), whereas Apple directly tells consumers which models can support Apple Intelligence. Regardless of whether on-device AI applications meet consumer needs, Apple has a clear selling advantage from the start,” Kuo said.
RiverPark Large Growth Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its first quarter 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL): Apple shares were a top detractor in the quarter. The company’s stock was pressured by negative news items including a government antitrust case, an Apple Watch patent dispute, and slowing China iPhone sales. Ultimately the company’s fiscal 1Q24 earnings report delivered a slightly better than expected quarter, but with guidance that disappointed investors. 1Q24 revenue and gross margin were better than feared, buoyed by stronger than expected worldwide iPhone sales which grew 6% despite a slight decline in China iPhone sales. Services revenue in the quarter was as expected and signaled the third quarter in a row of accelerating growth. Gross margins were also stronger than expected at 45.9%, the highest level in more than a decade. Guidance of $90 billion of revenue for 2Q24 was light however, due to weaker than expected iPhone sales in the current period and year-over-year declines in other hardware products facing difficult year-over year comps.
Although near-term trends are a bit muted, Apple is carrying lean inventory into an iPhone refresh cycle later this year. With an installed base of 2.2 billion active devices and significant growth of the company’s recurring revenue Services segment, we believe that Apple remains one of the most innovative, best positioned and most profitable companies in the mobile technology industry.”
Overall, Apple Inc (NASDAQ:AAPL) ranks 5th on Insider Monkey’s list titled 10 Biggest AI Stories and Ratings Updates You Should Not Miss This Week. While we acknowledge the potential of Apple, our conviction lies in the belief that under the radar 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.
READ NEXT: Michael Burry Is Selling These Stocks and Jim Cramer is Recommending These Stocks.
Disclosure: None. This article is originally published at Insider Monkey.
