Apple’s AAPL stock surged by +7% today, reaching new heights, following the announcement of a groundbreaking partnership with OpenAI to incorporate ChatGPT into its renowned product line and services.
Considering this monumental advancement, potential investors are contemplating whether now is the ideal time to acquire Apple’s stock as its operating system undergoes a transformative evolution.
Apple’s Technological Leap
Joining the league of tech giants embracing and harnessing the power of artificial intelligence through generative AI chatbots, Apple aligns itself with industry stalwarts like Alphabet, Meta Platforms, and Microsoft.
Apple’s iconic virtual assistant, Siri, will be enhanced with AI chatbot functionalities as part of Apple Intelligence, the company’s AI ecosystem set to be integrated into iOS 18, the forthcoming operating system that will drive its signature devices like the iPhone, iPad, MacBook, and smartwatch.
Recent Performance & Valuation Analysis
Surging past $200 per share, Apple’s stock is now showcasing a positive performance for the year, boasting a +7% increase. Despite outperforming the S&P 500 index marginally, Apple has lagged behind its tech counterparts such as Alphabet, Meta Platforms, and Microsoft, with the tech-heavy Nasdaq soaring by +15% year-to-date.
Image Source: Zacks Investment Research
At present levels, Apple’s forward earnings multiple of 29.3X slightly exceeds the P/E valuations of Meta Platforms and Alphabet, as well as the benchmark’s 21.7X, but remains below Microsoft’s 36.3X.
Image Source: Zacks Investment Research
Growth Trajectory Insights
Based on Zacks estimates, Apple’s total revenue is forecasted to remain relatively stable in fiscal 2024 but is anticipated to climb by 5% in FY25, reaching $405.81 billion. Noteworthy, Apple’s revenue outlook surpasses that of any of its tech counterparts, with Alphabet expected to surpass the $300 billion mark next year.
On the profitability front, Apple’s annual earnings are predicted to increase by 7% this year and are projected to spike by another 9% in FY25, amounting to $7.21 per share.
Image Source: Zacks Investment Research
Key Takeaway
While it’s premature to declare Apple at a pivotal juncture due to its advancements in artificial intelligence, AAPL currently holds a Zacks Rank #3 (Hold). Optimal buying opportunities may arise after the market stabilizes post the recent surge attributed to the Apple Intelligence unveiling and collaboration with OpenAI.
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