We recently compiled a list of the 8 Most Profitable Blue Chip Stocks to Invest In. In this article, we are going to take a look at where Apple Inc. (NASDAQ:AAPL) stands against the other profitable blue chip stocks.

The September inflation report came in hotter than expected and showed that it remains sticky. Headline inflation rose by 2.4%, slightly above the anticipated 2.3%, and down from 2.5% in August. Month-over-month, CPI increased by 0.2%, exceeding the forecast of 0.1%.

Core inflation, excluding food and energy, also came in higher than expected at 3.3%, compared to the anticipated 3.2%, marking a slight increase from August. On a monthly basis, core CPI rose by 0.3%, which matched August’s figures but was above expectations of 0.2%.

Following the report, the market is expecting a 25 basis points rate cut to no rate cuts in the upcoming Fed meeting. According to the CME FedWatch tool, 79.9% of interest rate traders expect the rate cuts to be at 450-475 bps at the coming Fed meeting while 20.1% expect the rate cut to stay the same. At the beginning of the month, 32.1% expected a 50 bps rate cut, while 67.9% anticipated a 25 bps cut.

Understanding Inflation Trends and Federal Reserve Strategy

Despite the sticky inflation, IBM’s vice chair, Gary Cohn believes that the Fed will cut rates by 100 bps this year. In an interview at CNBC’s ‘Money Movers’, he suggested that the U.S. is experiencing what a soft landing looks like, with inflation decreasing but not steadily. He indicated that reaching the Fed’s 2% target will be challenging, as inflation rates are likely to fluctuate around this level.

Cohn noted that for the first time in nearly two decades, the Fed is balancing both sides of its dual mandate, employment, and price stability, after focusing primarily on one at a time. He believes the Fed is making the right decisions and is currently in a delicate position as it missed meeting opportunities this year.

Cohn expects that the Fed will implement a total of 100 basis points in rate cuts this year, likely consisting of 25 basis point reductions over the next couple of months. When asked about inflation targets, he expressed a preference for slightly exceeding the target inflation rate, suggesting that a rate of around 2.2% would be more acceptable in a growing economy than undershooting the target.

Cohn also highlighted concerns about geopolitical risks and said that global tensions could lead to inflationary pressures by disrupting supply chains and increasing shipping costs.

Our Methodology

For this article, we use stock screeners to identify nearly 30 stocks above $100 billion market cap and $10 billion TTM net income. Next, we narrowed our list to 8 stocks that had a 5-year net income compound annual growth rate of above 10% and were most widely held by institutional investors. The most profitable blue chip stocks are listed in ascending order of the hedge fund sentiment, which was taken from Insider Monkey’s Q2 database of 912 hedge funds.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Apple Inc. (NASDAQ:AAPL)

Market Cap: $3.49 Trillion

5-Year Net Income CAGR: 12.85%

TTM Net Income: $101.956 billion

Number of Hedge Fund Holders: 184

Apple Inc. (NASDAQ:AAPL) designs, manufactures, and markets a range of technology products, including smartphones, personal computers, tablets, wearables, and accessories, while also offering related services. The product lines include the iPhone, a series of smartphones running on the iOS operating system. It is the 5th most profitable stock on our list.

The Mac line consists of personal computers based on macOS, including laptops such as the MacBook Air and MacBook Pro, as well as desktops like the iMac and Mac Pro. The iPad, a multipurpose tablet operating on iPadOS, includes models like the iPad Pro and iPad mini.

Apple (NASDAQ:AAPL) operates primarily on a geographic basis, with reportable segments that include the Americas, Europe, Greater China, Japan, and the Rest of Asia Pacific. Each segment is managed separately to cater to local customer needs and market conditions.

On October 6, Bloomberg reported that the company is moving away from its traditional annual product upgrade cycle to allow for more frequent releases and fewer delays. Previously, the company updated major products like iPhones and Macs on a set schedule, unveiling software in June and launching devices in September and October.

However, the growing range of products has made this approach impractical. As a result, Apple (NASDAQ:AAPL) is adopting a staggered release strategy, as can be seen by its upcoming AI tool, Apple Intelligence, set to launch on October 28 with iOS 18.1. The shift aims to improve innovation and enable revenue generation outside the holiday quarter.

Overall AAPL ranks 5th on our list of the most profitable blue chip stocks to invest in. While we acknowledge the potential of AAPL as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than AAPL but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

Read Next: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article is originally published at Insider Monkey.