Artificial intelligence (AI) has been all the rage since early last year, with many of the biggest tech companies staking their claim. For example, a number of so-called “Magnificent Seven“Stocks have been extremely open about their plans to take advantage of the windfall resulting from the rapid adoption of AI, and several of these same stocks have generated market-beating returns this year.
A member of the collective who was curiously excluded from the conversation is Apple (NASDAQ:AAPL). The iPhone maker has always kept its plans and product upgrades close to the vest, including its intentions regarding the deployment of generative AI. This, combined with lackluster iPhone sales, has hurt Apple’s stock price, which is essentially flat in 2024.
Apple’s Worldwide Developers Conference (WWDC) is set to begin on June 10, and speculation is rife that the company will finally present its Generative AI strategy. This, in turn, could light a fire in Apple’s stagnant stock price and pave the way for future gains.
With the stage set, should investors buy Apple stock ahead of its highly anticipated event? Let’s look at the available evidence.
Has the time come?
Apple hasn’t had much to say on the subject of generative AI, at least until recently. After remaining largely silent on the subject for nearly a year, CEO Tim Cook has finally started to shed some light on Apple’s aspirations. Earlier this year, Cook said of the company’s AI plans: “We continue to dedicate a tremendous amount of time and effort, and we’re excited to share details of our ongoing work in this domain later this year. When asked for additional details, Cook responded, “Our modus operandi, if you will, has always been to do work and SO talk about work. »
Cook opened up a bit more during Apple’s second-quarter earnings call. “We remain very optimistic about our opportunity in generative AI. We are making significant investments and look forward to sharing some very exciting things with our customers soon.” Cook then highlighted the company’s “seamless” integration of hardware, software, services and processors, without ever worrying about user privacy.
Historically speaking, Apple has announced some of its most revolutionary product releases and updates at WWDC, so it makes sense that the company would reveal its generative AI goals at the event.
A “once in a decade” event?
Wall Street is abuzz over Apple’s annual conference, which would provide the ideal venue to showcase the company’s AI capabilities to developers. This would give them time to create AI-based generative apps before the next iPhone comes out.
Bank of America Analyst Wamsi Mohan suggests that the release of AI-enabled phones could trigger a multi-year upgrade cycle that is a “once in ten years type event.” He goes on to suggest that with more than 2.2 billion active devices, Apple could make generative AI mainstream. These AI-powered devices could significantly improve photography, health monitoring, security, and even battery life.
Wedbush analyst Dan Ives is even more bullish, increasing his price target on Apple stock to $275 while maintaining an Outperform (Buy) rating on the shares. This represents a 45% increase from Tuesday’s closing price. Ives posits that an “AI-driven iPhone 16 supercycle (is) now on the horizon.” The analyst goes on to say that generative AI will represent “many monetization opportunities” for Cook and his company. Ives also revealed that recent channel checks suggest the start of a long-awaited rebound in iPhone sales in China, one of Apple’s largest markets. Tepid sales in the region have weighed on the stock in recent quarters.
It’s also worth noting that of the 38 analysts who issued an opinion on Apple stock in May, 84% rated it a buy or strong buy, and none of them recommended selling . Given that Wall Street rarely agrees on anything, it’s remarkable that there is such a strong consensus.
Should you buy Apple stock now or wait until after WWDC?
For day traders looking to make a quick buck, entering and exiting stocks during major events to catch the rally before selling, Apple may not be the stock for them. you need. Truth be told, we don’t know exactly what Apple will announce at WWDC. Additionally, even if the company dabbles in generative AI, that doesn’t mean its efforts will produce immediate results.
However, for investors looking at years rather than weeks or months, Apple has many advantages. The company has a long track record of defying its detractors while continuing to build an empire. Market historians will note that Apple has rarely been first to market with anything, but it frequently releases cutting-edge products that stand the test of time. At the same time, services are Apple’s fastest-growing segment, thanks to its 2.2 billion active devices.
If I had to risk a guess, I tend to believe that Apple stock will perform much better in the second half of 2024 than in the first half and will be an investment that will outperform the market over the next five years. That said, if the company’s WWDC announcement disappoints, things could be tough in the short term.
Finally, there is the question of Apple’s valuation. At 29 times trailing 12-month earnings, the stock is only slightly more expensive than the stock’s 27 times multiple. S&P500. Additionally, over the past five years, Apple stock has soared 327% (as of this writing), more than three times the 88% gains produced by the broader index. This helps illustrate why Apple deserves a premium.
For investors looking beyond June, I think Apple’s long history of success speaks volumes about the company and its future prospects. This is why investors should just buy Apple for the long term.
Should you invest $1,000 in Apple right now?
Before buying Apple stock, consider this:
THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Apple wasn’t one of them. The 10 selected stocks could produce monster returns in the years to come.
Consider when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $677,040!*
Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.
*Stock Advisor returns May 28, 2024
Bank of America is an advertising partner of The Ascent, a Motley Fool company. Danny Vena has positions at Apple. The Motley Fool holds positions and recommends Apple and Bank of America. The Motley Fool has a disclosure policy.
Should you buy Apple stock before June 10? was originally published by The Motley Fool
