ETFs
ETFs in the Spotlight as Apple Reclaims Most Valuable Stock – June 14, 2024
Apple Inc. (Quick quote AAPLAAPL – Free report) has regained its position as the most valuable company in the world, surpassing Microsoft Corp. (Quick quote MSFTMSFT – Free report) . This achievement marks an important milestone, driven by Apple’s recent announcement regarding its generative AI initiative called “Apple Intelligence” (read: Bet on “Apple Intelligence” with these ETFs).
These potential AI initiatives have generated optimism about future iPhone generations and likely revenue increases. Apple Intelligence will be available for iPhone 15 Pro, iPads, and Macs with Apple’s M1 series chips and newer models starting this fall. This could even lead to a rebound in iPhone sales following the recent decline in budget performance.
Market capitalization and recent performance
Thanks to investor optimism about its growth prospects, particularly in AI, Apple has just recorded its best three-day performance since 2020, by Bloomberg. After a strong recovery, Apple closed with a market capitalization of $3.285 billion on June 13, 2024, narrowly surpassing Microsoft at $3.282 billion.
It’s the first time since January that Apple has surpassed Microsoft in stock value, reflecting recent shakeups among Wall Street’s top stocks. In fact, earlier in the week, Apple briefly fell behind Nvidia Corp. (Quick quote NVDANVDA – Free report) in market capitalization. However, investors have shown confidence in Apple’s potential as a likely AI winner, fueling its recent gains.
Analyst Outlook
Bank of America analyst Wamsi Mohan highlighted the potential for AI features to drive a significant upgrade cycle for Apple, potentially increasing average selling prices and increasing revenue in the years to come, as quoted on Bloomberg.
Target price
Based on short-term price targets offered by 30 analysts, the average price target for Apple stands at $206.96. Forecasts range from a low of $164.00 to a high of $275.00. And Apple’s current price is $214.24.
What awaits us?
So far, Apple’s AI initiatives have been well received by investors. However, fierce competition awaits Apple in the AI space. Stocks with more direct exposure to AI, such as Microsoft, Amazon.com Inc., Alphabet Inc. and Meta Platforms Inc., have performed better in 2024. Nvidia, in particular, has seen immense gains due to of its leading role in AI development.
Additionally, Apple’s association with ChatGPT has received a mixed response. Ben Wood, chief analyst at CCS Insight, and Elon Musk, head of Tesla, believe that ChatGPT integration could create deeper problems for the company, as cited on the BBC.
Investors should note that Apple’s competitors faced several AI issues during the initial phase of deployment. Apple could also experience similar issues. Therefore, it is better to follow the company with the ETF approach. The basket approach minimizes company-specific concentration risks.
Apple-intensive ETFs include: Selected Technology Sector SPDR Funds (Quick quote XLKXLK – Free report) , iShares Global Tech ETF (Quick quote IXNIXN – Free report) And iShares US Tech ETF (Quick quote IYWIYW – Free report) . By the way, these ETFs have solid exposure to Microsoft, the second most valuable and winning company in AI.