Billionaire Bruce Berkowitz’s 6 Stock Picks with Highest Upside Potential

4. Apple Inc. (NASDAQ:AAPL)

Fairholme Capital Management’s Stake: $601,008

Number of Hedge Fund Holders: 166

Average Upside Potential: 20.01%

Apple Inc. (NASDAQ:AAPL) is a technology company. Like many other stocks, Apple has also been facing tariffs and overall macroeconomic uncertainty.  The company recently reported fiscal second quarter earnings that beat Wall Street expectations, with sales up 5.1% year on year to $95.36 billion, while non-GAAP profit of $1.65 per share was 1.7% above analysts’ consensus estimates. Despite earnings beating consensus estimates, Apple’s services revenue of $26.65 billion for the quarter came in below the expected $26.70 billion.

According to CEO Tim Cook, Apple saw “limited impact” from tariffs in its March quarter because of supply chain optimization. However, he estimated that tariffs would add $900 million in costs for the current quarter, but that he remained “confident” looking ahead. On May 5th, Morgan Stanley reiterated the stock as “Overweight” and said that it remains range-bound for now. It also said that it believes Apple’s efforts to diversify production outside of China are working.

“The fact that Apple only faces $900M of tariff costs in the June Q, despite being over-indexed to China, shows SE Asia production diversification is working. That said, mgmt wasn’t able to provide any segment-level guidance for the June Q (not even Services, which they effectively always do), couldn’t commit to how much Product would come from India/Vietnam in the September quarter and beyond (leaving the tariff cost impact open-ended), didn’t address pricing or other tariff mitigation tools, and didn’t provide an updated timeline for the new Siri introduction.”

-Morgan Stanley analysts, led by Erik Woodring, in a Friday investor note.