Apple is once again silver in the markets; has regained second position in the world by capitalization, reaching 3.27 trillion dollars, slightly surpassed by Microsoft (3.36 trillion). Nvidia’s rally, which came to the top, and its subsequent retreat has been moving the positions of the three technology companies in recent weeks.
The shares of the apple company – which has gained 10% for the year and has reached an all-time high – have had a strong boost in the first days of June coinciding with the celebration of WWDC, the annual conference for developers where it gives know the ones of the season. One that has penetrated the market with special enthusiasm, as it could not be otherwise in 2023, is artificial intelligence (AI). “The announcement of the financial implications of products that should drive demand, for example Apple Intelligence, is encouraging, leaving an opportunity for more direct monetization of AI in the future, potentially mitigating costs for users.” , explains a Goldman Sachs report.
The American bank has a buy recommendation and argues for it: “The growth in turnover masks the strength of the Apple ecosystem and the associated revenue, durability and visibility. “Product innovation should more than offset cyclical headwinds to product revenue, such as reduced demand for iPhone units due to a longer replacement cycle, and a decline in the PC and iPad categories.” Likewise, he believes that “the majority of gross profit growth over the next five years should be driven by services, which should mark an inflection point in the investment narrative and support the company’s premium multiple.”
Margin increase
Morningstar also sees a promising future. “We expect a better 2025 for stocks with the launch of the iPhone 16 with generative AI features,” she notes. Meanwhile, he expects a weak fiscal year 2024, “due to the headwinds of iPhone revenue in China and the slowdown in device renewals around the world.” The experts’ thesis is that “a greater mix of premium products, such as the iPhone Pro models, will improve gross margins in the medium term.” Regarding the role of artificial intelligence, Morningstar specifies that “the initial functions that would benefit would be the Siri voice assistant, messages and Apple’s Safari browser.”
For its part, Citi does not expect “Apple’s AI capabilities to be significantly different from what its peers do,” but highlights that “it has a unique advantage when it comes to generative AI. The company controls its own silicon design with an integrated ecosystem of hardware, software and services, which gives them a good position to start,” the analysts indicate.
Apple’s more than 2 billion devices worldwide provide a clear message for Citi: “You have a large user base with a huge amount of data to optimize your experience. Meanwhile, privacy and security have become one of the biggest concerns when it comes to generative AI models, and Apple is known for taking privacy more seriously than its competitors.
The services area is also Apple’s strong point under the vision of Bank of America (BofA), where it expects a 14% increase in turnover by 2024. “Apple Intelligence will drive greater growth in services.” “We believe that conversational AI with context and privacy is key to monetizing the installed base of Apple devices over time with more productivity, higher priced applications, greater subscriptions and payments for them.”
Bank of America is one of the firms with the highest valuation on the stock: $230, 8% higher than its current level, compared to an average market target of $210.10, which is below its current price. It recommends buying, as do most analysts (65% of the total). 28.3% choose to hold and 6.7% to sell.
Rising dividend and stock rise of 250% in four years
Evolution. Apple’s continued bullish run started with the pandemic lows marked at the end of March 2020; Since then, the stock has risen 250% and has been the first company to exceed three billion dollars in capitalization, which it currently maintains. This valuation is more than twice that of all the Ibex listed companies. Apple is the second largest company on the Nasdaq 100, with 8.4%, behind Microsoft (8.75%). Nvidia’s is 7.64% and Amazon and Broadcom’s exceeds 5%.
RemunerationThe company has just announced its largest share buyback program ($110 billion) and has distributed a cash dividend of $0.25 to its shareholders in May, which represents an increase of 4% and the largest payment made in the last four years.
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