Famous Analyst Identifies ‘Holy Grail’ of Apple Inc. (NASDAQ:AAPL) AI Catalysts
We recently published a list of According to a famous Wall Street analyst, the 12 best AI stocks are leading the ‘Big Tech race’ to $4 trillion. With Apple Inc. (NASDAQ:AAPL) ranking 6th on the list, the company deserves a closer look.
Dan Ives, an analyst at Wedbush Securities, has stated in a recent note that the big tech giants are currently in a “race” to capture the $4 trillion artificial intelligence market. He referred to GPUs as the new “oil” or “gold” in the tech sector. Ives said the AI ”party” has just begun and the clock shows “9 p.m. in a party that lasts until 4 a.m., with the rest of the tech world now joining in.” Ives believes that investing in GPUs and data centers is the “only game in town.” Ives believes the “first wave” of artificial intelligence has benefited the big tech giants leading the AI race, while the second, third, and fourth “derivations” are beginning to show trickle-down effects on other companies.
At a separate investor event recently, Ives predicted that the AI-led bull run could continue for another two to three years, saying that investors could expect market caps of major technology companies to reach $3 trillion to $4 trillion in a year.
“The bull market in technology is just beginning,” Ives is said to have said.
In his last note, Ives highlighted several stocks that he believes could benefit from the AI revolution. In this article, we take an in-depth look at these stocks, discuss their AI-related growth catalysts, and consider whether or not they are solid long-term investments. With each stock, we mentioned hedge fund sentiment. Why do we care about the stocks hedge funds invest in? The reason is simple: Our research has shown that we can outperform the market by mimicking the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks each quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points. (More details can be found here).
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Apple Inc (NASDAQ:AAPL)
Number of hedge fund investors: 150
Dan Ives of Wedbush is a big supporter of Apple Inc (NASDAQ:AAPL). In a recent note, he said that while NVDA is leading the three-way race between Apple Inc (NASDAQ:AAPL), NVDA and MSFT, the iPhone maker has strong upside potential due to its AI plans. Ives believes the “Holy Grail” for Apple Inc (NASDAQ:AAPL) is two things: a new iPhone refresh cycle and AI apps. Ives believes Apple’s AI strategy could usher in a new iPhone refresh cycle that could see 270 million of the 1.5 billion iPhones worldwide updated. On the other hand, Ives expects app developers to create “hundreds of apps” using Apple Inc’s (NASDAQ:AAPL) AI stack to allow consumers to interact with AI on their iPhones.
Following the recent AI announcements at the WWDC event, the market capitalization of Apple Inc. (NASDAQ:AAPL) shares gained over $215 billion to close at a record high on June 11. TF International Securities analyst Ming-Chi Kuo said in a new note that Apple has a competitive advantage over others with its on-device AI.
Well-known Wall Street analyst and Managing Partner of Deepwater Asset Management Gene Munster recently caused a stir when he said in a post on Twitter that Apple Inc (NASDAQ:AAPL) is a better investment than Nvidia in the long run. Munster believes that owning Apple Inc (NASDAQ:AAPL) will yield a higher return next year because the market is “denying” Apple’s AI potential.
Apple Inc (NASDAQ:AAPL) trades at 26 times its 2025 EPS estimate ($7.22). While this multiple is higher than the industry average of 30, it does not show that the stock is overvalued considering Apple Inc (NASDAQ:AAPL) is projecting 6.40% revenue growth in fiscal year 2025 and 10.50% annualized growth over the next five years.
Mar Vista Focus Strategy stated the following about Apple Inc. (NASDAQ:AAPL) in its Q1 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL) stock was under pressure during the quarter as investors worried about slowing demand for smartphones, regulatory action by the U.S. Department of Justice and Chinese government mandates limiting iPhone usage by government officials. Despite these near-term headwinds, we continue to believe the company will remain competitive and benefit from the Apple ecosystem, which has an installed base of over 2 billion devices and over 1 billion paying subscribers. We believe the Apple ecosystem will support a more predictable cash flow stream that should increase intrinsic value by a high single-digit percentage over our investment horizon.”
Overall, Apple Inc (NASDAQ:AAPL) ranks 6th on Insider Monkey’s list of the title According to a famous Wall Street analyst, the 12 best AI stocks are leading the ‘Big Tech race’ to $4 trillion. While we recognize the potential of Apple Inc (NASDAQ:AAPL), we believe AI stocks promise higher returns and do so in a shorter period of time. If you are looking for an AI stock that is more promising than Apple Inc (NASDAQ:AAPL) but trades at less than 5 times earnings, read our report on the cheapest AI stock.
CONTINUE READING: Analyst sees a new $25 billion “opportunity” for NVIDIA And Jim Cramer recommends these stocks.
Disclosure: None. This article was originally published on Insider Monkey.
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