Just when investors doubted Apple’s (NASDAQ:AAPL) momentum, its developer conference revealed many AI-driven products in the pipeline. Unsurprisingly, these announcements boosted AAPL stock to new all-time highs.
This has many investors reconsidering the company as an AI laggard, instead choosing to focus on the company as a key AI ecosystem machine in the making.
That could certainly be the case. But as with all such catalysts, time will be the ultimate judge.
For now, AAPL stock certainly doesn’t appear to be an exciting growth stock it once was. Growth has slowed. And while AI is seemingly poised to be the accelerant for the company’s earnings growth profile, we’ll have to wait and see how the company’s upcoming product releases actually perform.
Let’s dive more into whether Apple is a buy at current levels, considering the run it’s been on this year.
Wall Street Loves AI
Wedbush Securities has been among the most bullish names on Apple in the past. The firm’s key analyst Dan Ives recently noted that megacap tech stocks could see a 15% rise in the second half 2024, driven by AI.
Ives emphasized the growing $4 trillion AI arms race among major tech players, likening GPU chips to the new oil or gold. He predicted strong Nasdaq performance ahead, with tech stocks expected to rise by 15% because of expanding AI applications.
Ives believes the AI rally could extend to tech firms with strong installed bases capable of using generative AI.
Last month, Ives told CNBC that the tech bull market could last at least two more years. He outlined a potential “tech cold war” with China as a contained threat. The AI boom, which he called the “fourth industrial revolution,” is expanding beyond semiconductors to other companies.
Apple is also a top choice on Dan Ives for the second half 2024. To add to the optimism, TF International Securities analyst Ming-Chi Kuo also believes in Apple’s competitive edge on AI. Not only that, Deepwater Asset Management also thinks Apple is a better long-term bet than Nvidia.
AI and Siri
Apple announced major AI changes to Siri at its WWDC event, but the release date for this upgrade remains unclear.
Bloomberg’s Mark Gurman, known for accurate Apple leaks, reported in his Power On newsletter that Apple Intelligence AI will debut this fall, with significant Siri updates arriving next spring.
These updates will enable Siri to access and work with other Apple apps via simple commands, such as retrieving a driver’s license number from a photo.
According to Gurman, Siri will get a design overhaul and ChatGPT integration this fall but will lack key contextual features. These features will be beta-tested by developers in January and publicly released in spring 2025.
Apple’s June news release confirmed that Apple Intelligence would start in beta this fall, with additional features rolling out over the next year.
Apple entered the AI space two years after ChatGPT’s launch, opting for a collaborative approach by integrating ChatGPT and allowing AI models from other competitors.
Cautiously Bullish on AAPL Stock
It’s true that some level of improved enthusiasm should circulate around Apple right now. If the company can integrate AI into its offerings well, the company’s operating leverage could propel a new wave of earnings growth the likes of which we haven’t seen in some time.
The thing is, at current valuations, AAPL stock certainly looks like a relatively slow-growth stock that’s expensive.
I’m cautious on Apple, but I’m also an observer that’s been wrong in the past when I thought this stock has been expensive. Maybe the market is getting the AI trade right on this name – time will tell.
On the date of publication, Chris MacDonald did not hold (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.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
