We recently published a list of Analysts Are Talking About These 10 AI Stocks. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against other stocks analysts are talking about.
Marco Argenti, Chief Information Officer at Goldman Sachs, recently said that in 2025, the world will witness the full potential of AI that has been in development. He used the analogy of a child raised in a library, now ready to step out into the world.
“What if they, we make them interact with sensory data, with vision data, with, uh, you know, like basically opening that door of the library and making this child walk into the real world? I think this creation of word models, like they’re called generally in the industry, where you combine multimodal information, that is not only text but is also videos, but is also sensory data. It might be temperature, it might be anything you can perceive around you, could actually unlock the next level of capabilities,” Argenti said, according to CNBC.
Despite high hopes, a potential plateau in performance improvements in AI systems, high energy consumption of AI data centers and transparency remain key issues tech companies will continue to grapple with in 2025.
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A wide view of an Apple store, showing the range of products the company offers.
Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
Tom Forte, Maxim Group senior consumer internet analyst, said while talking to CNBC that Apple Inc (NASDAQ:AAPL) is an expensive stock.
“If you look at the valuation, it’s trading well north of 30 times on a PE basis, which is at or above its peers who are also taking advantage of this AI-fueled rally. When you look at the next couple of years for Apple Inc (NASDAQ:AAPL), on what looks to be a very slow-developing upgrade cycle, if there is a major upgrade cycle, you’re looking at mid to high single-digit EPS growth. So, north of 30 times PE, mid single-digit to high single-digit EPS growth—I think it’s, you know, an expensive stock.”
Apple Inc (NASDAQ:AAPL) is desperately in need of new catalysts. The company’s revenue in China fell 8% in fiscal year 2024, following a 2% decline the previous year. The Chinese market accounts for about 15% of Apple’s total revenue, so this downtrend cannot be ignored.
Investors had hopes for the Wearables, Home, and Accessories segment, but so far its performance has been weak. Vision Pro faces tough competition from Meta’s $500 Quest and the more affordable Quest 3S, making it hard to justify its $3,500 price tag. The failure of Apple’s HomePod, unable to compete with Amazon’s and Google’s lower-priced offerings, further highlights the challenges in this market.
Apple’s iPhone 16 has not shown promising growth prospects yet and investors are still in a wait-and-see mode on the AI platform.
While the company is projected to achieve 9.5% EPS growth this fiscal year and 12.3% growth in the next, much of this growth is already priced in, as the stock trades at nearly 30 times the expected EPS for the fiscal year ending September 2026.
Parnassus Growth Equity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:
“Apple Inc. (NASDAQ:AAPL) shares rose during the quarter, making our underweight position a relative detractor. Investors reacted positively to the new iPhone 16 lineup and its advanced features, including generative artificial intelligence, greater durability and increased processing power.”
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Disclosure: None. This article is originally published at Insider Monkey.
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