So far this year, Apple (AAPL)Legendspinballmachine.us) due to failure to provide a source of future growthLegendspinballmachineHe was punished by the stock market for his vision. On Thursday, after Apple took a step towards giving an AI, the company's shares were highly sought after.
Apple has decided to overhaul its Mac computer product line and focus on artificial intelligence. The decision resonated with investors, pushing the company's share price up 4.3 per cent and its market capitalization by $112 billion, its best performance in nearly a year.
Anthony Saglimbene, chief market strategist at Ameriprise Financial, saidLegendspinballmachine"any statement that pushes artificial intelligence to consumer hardware could be very good for Apple." "however, the impact has yet to be determined."
This will be the key to assessing the sustainability of the latest rally. Before the announcement on Thursday, the stock had fallen 15 per cent from its all-time high set in December, wiping out more than $460 billion in market value. Apple shares are close to their lowest level in about a year, and bargain buyers clearly have reason to risk Apple's latest attempt in artificial intelligence.
However, maintaining this momentum will depend on Apple's ability to meet its growth commitments. For Apple, that could mean bringing artificial intelligence into iPhone.
Lower valuation
Daniel Skelly, head of Morgan Stanley's wealth management market research and strategy team, said: "LegendspinballmachineWe think Apple will make a comeback. " "it's hard for us to bet against some perennial winners forever."
Apple has paid a heavy price for its recent stagnation. It is one of the worst performers of the top seven technology stocks this year, second only to Tesla. This makes its share price relatively cheap.
Apple currently trades at 26 times earnings, lower than its large-cap peers such as Microsoft. According to the data, the price-to-earnings ratio of the stock is lower than the average of 27 times the Nasdaq 100 index.
The poor performance reflects a lack of a clear artificial intelligence strategy and a weak trend for several quarters, despite the company's strong financial position and proven revenue-generating capacity.
"it has all these defenses, such as its cash flow, balance sheet and buybacks," Skelly said. "Apple will begin to outline the clearer and visibility of its artificial intelligence product line, and although it may not be launched this year, there are growing expectations for iPhone that supports artificial intelligence." "in other words, it is becoming more and more attractive."
The enthusiasm of hedge funds
JPMorgan believes hedge fund investors are increasingly enthusiastic about Apple as falling valuations and tailwinds in artificial intelligence offset challenges in China and the company's services business.
Hedge funds are looking at headwinds, looking for entry points, and are "increasingly interested in the opportunities for the artificial intelligence upgrade cycle", Motorola analyst Samik Chatterjee said in a recent report. Chatterjee rated the stock as "outperforming the market".
The broader hope among Apple investors is that artificial intelligence will be a catalyst for Apple to accelerate growth again. Profit margins are falling as revenue has fallen in four of the past five quarters. Analysts expect Apple's sales to fall 4.6% in second-quarter results to be released in the coming weeks. While this is Apple's weakest growth in decades, the upside is that revenue is expected to rebound later this year.
"investors have historically underestimated Apple's gross margin, which seems to be happening again," said Wamsi Mohan, an analyst at Bank of America. He added: "We believe that Apple's gross margin will rise significantly, driven by an increase in the portfolio of services in the overall portfolio."
Compared with the rest of the S & P 500, the big seven technology stocks are bigger. Despite the poor performance of Apple and Tesla this year, the group had a record weighting in the benchmark index on Thursday against a backdrop of broad gains in technology stocks.
