Apple (NASDAQ: AAPL) is back to reclaiming its throne as the most valuable company globally. The tech giant’s resurgence in 2024 is attributed to the buzz surrounding its innovative artificial intelligence (AI) technology, Apple Intelligence, and the upcoming iPhone models set to leverage this cutting-edge AI integration.
After trailing its “Magnificent Seven” counterparts in the AI landscape for some time, Apple boasts a unique edge with over 2 billion devices already in circulation—an installed base that positions them to seamlessly introduce generative AI tools to consumers.
With a lofty market capitalization of $3.5 trillion, Apple’s knack for continuous innovation has defied stagnation, posing the question: Is the current moment a golden opportunity to invest in Apple stock?
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The Rise of Apple Intelligence
Although Apple’s recent foray into AI with the Apple Vision Pro spatial computing headset faced challenges, all eyes are now on Apple Intelligence, the company’s latest breakthrough technology.
Apple Intelligence boasts an array of features including image generation, custom Bitmojis and emojis, a proofreading writing assistant, email and audio summarization tools, and an upgraded Siri voice assistant.
Set to debut in beta in October, Apple Intelligence is primed to be Apple’s most significant software update to date.
Early reports on iPhone 16 sales have been anecdotal and varied. Official numbers are scheduled for release at the end of October, with these metrics crucial in gauging initial interest in Apple Intelligence.
Despite challenges like the ongoing Department of Justice antitrust case, Apple’s services segment remains a bright spot for potential growth.
Evaluating the Investment Potential
Investors have enthusiastically driven up Apple’s stock price this year, leading to a surge in its price-to-earnings multiple—a level not seen in the past decade aside from a brief spike during the pandemic.
While a rising earnings multiple typically indicates rapid growth, Apple’s revenue expansion has been moderate. The June-ended fiscal third quarter saw a 5% uptick in revenue to $85.8 billion, with an impressive 11% rise in earnings per share fueled by robust margins and share buybacks.
Despite its premium valuation attributed to competitive advantages and market leadership, Apple’s pricey stock reflects an 11% growth in earnings per share, raising concerns about its current valuation.
Timing Your Move with Apple Stock
Given Apple’s remarkable run, its lofty valuation, and the uncertainties surrounding Apple Intelligence, a potential pullback in Apple stock could materialize if iPhone 16 sales fail to meet expectations.
While historically holding Apple stock has been a fruitful endeavor, the present high price warrants caution. Patiently awaiting a market correction may prove prudent, especially until tangible results from Apple Intelligence become evident.
Considering a $1,000 Investment in Apple
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