Smartphone giant Apple (NASDAQ:AAPL) has been on a bumpy road this year, but recent price momentum has been to the upside. Shares of AAPL stock now trade above $190 per share at the time of writing, and are closing in on their all-time high. If Apple can break through the $200 level, questions remain as to how high this tech stock could fly.
That said, it hasn’t been all rainbows for Apple this year. The stock bottomed below $165 per share in April, meaning this recent move has been quite violent to the upside.
The question many investors have is whether this rally is overdone, or if this momentum is worth buying into. Let’s dive into what to make of this madness right now.
Boosting Sales in China
Among the most key latest Apple developments is news that the smartphone maker will be cutting some prices on its iPhones to prepare for China’s 618 shopping festival. This move appears aimed at competing with local Chinese brands like Huawei. Notably, Alibaba and JD.com will offer about 20% off selected iPhone units. This will lead to some big savings for consumers for certain models such as the 256GB iPhone 15 Pro Max, with the goal of expanding the company’s market share in China, an important market for Apple.
During China’s mid-year 618 shopping festival, Tmall and JD.com, among Apple’s sales channels, offer regular discounts. This year’s event spans May 20 to June 20. Apple provides discounts of more than 2,000 yuan on the iPhone 15 for trading in iPhone 11 or newer models. These discounts coincide with efforts to counter slowing sales and Huawei’s competition. Huawei’s resurgence challenges Apple, particularly after the U.S. sought to restrict Huawei’s access to advanced chips.
In Q1, Apple saw a 25% decline in Chinese sales, with market share dropping from 20% to 15%, per Canalys. Despite Huawei’s Pura 70 launch challenging iPhones, Apple’s earnings beat and stock buyback bolstered investor confidence. If Apple can continue to expand its gross profit margin due to its growing services business, and grow its market share in China, this is a stock that could certainly see its momentum continue.
Apple CFO Visits Taiwan Semiconductor
Recent headlines that Apple COO Jeff Williams visited Taiwan Semiconductor to discuss securing its advanced AI processor technology is something worth keeping an eye on. Williams reportedly met with TSMC President C.C. Wei, focusing on improving access to TSMC’s 2 nm process. The meeting was kept low-profile, and for good reason.
Both Apple and Taiwan Semiconductor did not comment on the matter. However, TSM is currently the world’s biggest foundry, producing chips for AMD and Nvidia. It is rumored that Apple has been developing chips for its servers to manage more AI tasks. These chips are expected to be unveiled at Apple’s next developer conference.
According to reports, the M2 Ultra chip is set to debut in its servers, and the new M4 silicon for its data centers. The advantages these chips provide in terms of the AI race ear easy to understand, with some notable features like seamless software, hardware, and service integration.
Warren Buffett Loves AAPL
Berkshire Hathaway’s (NYSE:BRK-B) portfolio, curated by Warren Buffett, reflects a shift toward modern businesses, including technology stocks like Apple.
Investors and Buffett enthusiasts find compelling reasons to invest in Apple despite Berkshire’s potential future trimming of its holdings. Apple’s aggressive move into generative AI is anticipated at WWDC24 starting on June 10, 2024. The conference might emphasize AI, akin to Google’s recent I/O 2024 event.
While Buffett has trimmed back his position, it’s clear he remains ultra-bullish on the world’s most valuable smartphone maker. It’s my view that Apple will remain a solid long-term holding of Berkshire, and this is a company that’s worth holding such a position in a long-term investor’s portfolio right now.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
