ETFs
Apple jumps on the AI train: buy ETFs
Apple AAPL, which has been far behind its competitors in artificial intelligence (AI) adoption, is finally catching up after launching new AI features at its much-anticipated Worldwide Developers Conference (WWDC). The introduction of many AI-based features is expected to kick off the next upgrade cycle, improving the company’s performance and restoring investor confidence in Apple.
The stock jumped 7% to a record high, marking the biggest one-day jump since November 2022 and the first all-time high of 2024. The gain added $215.1 billion to the company’s market capitalization. company, resulting in one of the biggest single-day gains. value added by any company in history, according to data compiled by Bloomberg (read: Forget the iPhone: 4 reasons to bet on Apple ETFs).
Investors looking to profit from the coming boom should buy ETFs with the largest allocation to the tech titan. Selected Technology Sector SPDR Funds XLK, Vanguard Information Technology ETF VGT, MSCI Information Technology ETF FTEC, iShares US Tech ETF IYW and Vanguard Mega Cap Growth ETF MGK has Apple as a #1 or #2 company with a double-digit allocation and has a Zacks Rank #1 (Strong Buy) or 2 (Buy).
New AI Features
At the annual WWDC on Monday, the iPhone maker revealed a brand new AI feature called Apple Intelligence for iPhone, iPad, and Mac. The technology will make it possible to summarize text, create original images and retrieve the most relevant data when users need it.
Apple Intelligence opens up new ways for users to improve their writing and communicate more effectively. With all-new system-wide writing tools built into iOS 18, iPadOS 18, and macOS Sequoia, users can rewrite, proofread, and summarize text almost anywhere they write, including Mail, Notes, Pages, and apps third parties. The company will integrate this functionality into its various operating system offerings, including iOS, macOS and the latest, visionOS (read: Bet on “Apple Intelligence” with these ETFs).
Apple Intelligence also includes the biggest update to Siri since it was announced more than a decade ago. The feature will be “more deeply integrated” into its operating systems. In the case of iOS, this will mean swapping the familiar Siri icon for a bright, blue border that surrounds the desktop while in use. The new AI technology will also bring new features to emojis with custom Genmoji using a text field to create custom emojis.
Apple announced a partnership with ChatGPT creator OpenAI, which allows customers to access ChatGPT through Siri at no additional cost. Apple Intelligence will roll out later this year, but some features, including the ability for Siri to precisely control app functionality, won’t be available until next year. Support for languages other than English will also come later.
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Analysts become optimistic
Wall Street is once again bullish on Apple following the company’s new AI features. At least 13 analysts raised their price targets on Apple after the event, with some saying the latest features could encourage a frenzy of new purchases as the company prepares to announce a new lineup of iPhones in the fall.
A Wedbush analyst expects that adding new tools to the iPhone will trigger “an AI-driven iPhone upgrade cycle starting with iPhone 16.” The analyst expects AI to add $30 to $40 per share to Apple’s growth. Meanwhile, a Bank of America analyst is also optimistic that the features will lead to “an upgrade cycle for AI-enabled IntelliPhones.”
Focus on ETFs
SPDR Select Technology Sector Fund (XLK)
The Technology Select Sector SPDR fund targets the broad technology sector and tracks the Technology Select Sector Index. It holds around 65 stocks in its basket, with Apple representing 21% of the shares. The Technology Select Sector SPDR Fund holds key holdings in software, semiconductors and semiconductor equipment, as well as technology hardware, storage and peripherals.
The Technology Select Sector SPDR Fund is the most popular and widely traded ETF, with $67.1 billion in assets under management and an average daily volume of 5.5 million shares. The fund charges 9 basis points in fees per year.
Vanguard Information Technology ETF (VGT)
Vanguard Information Technology ETF manages $70 billion in its asset base and provides exposure to 313 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, Apple represents a 15.3% share. Semiconductors, system software, technology hardware storage, peripherals and application software are the four major sectors.
The Vanguard Information Technology ETF has an expense ratio of 0.10%, while volume is solid at nearly 412,000 stocks (read: Can Technology ETFs Maintain Their Winning Momentum?).
MSCI Information Technology Index ETF (FTEC)
The MSCI Information Technology Index ETF hosts 305 technology stocks with $10.1 billion in assets under management. It tracks the MSCI USA IMI Information Technology Index. Apple represents 15.8% of the basket.
The MSCI Information Technology Index ETF has an expense ratio of 0.08%, while volume is solid at 207,000 shares per day.
iShares US Tech ETF (IYW)
The iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, providing investors with exposure to 131 US electronics, software and hardware, and information technology companies. Apple represents 15.5% of assets.
The iShares Dow Jones US Technology ETF has $17.7 billion in assets under management and charges 40 basis points in fees and expenses. Volume is good as it trades 911,000 shares per day.
Vanguard Mega Cap Growth ETF (MGK)
The Vanguard Mega Cap Growth ETF provides diversified exposure to the largest growth stocks in the U.S. market. It tracks the CRSP US Mega Cap Growth Index and holds 79 stocks in its basket, with Apple accounting for 12.4% of total assets.
The Vanguard Mega Cap Growth ETF charges 7 basis points in annual fees and trades a good volume of around 277,000 shares per day on average. The fund has assets under management of $20.4 billion.
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Apple Inc. (AAPL): Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Fidelity MSCI Information Technology Index (FTEC) ETF: ETF Research Reports
iShares US Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
Vanguard Mega Cap Growth ETF (MGK): ETF Research Reports