We recently Top 10 AI Stocks Upgraded by Wall Street AnalystsApple ranks fifth on the list, which is why this stock is worth taking a closer look at.
There’s been a lot of noise about AI stock valuations and investors overpaying for big tech stocks that promise productivity gains, real AI products, AGI, and other things that are still far away. But the market doesn’t seem to care what AI skeptics and naysayers believe. There’s no end in sight to the AI-driven stock rally, and analysts expect more to come. Goldman Sachs’ Scott Rabner recently said that a “wall of money” is coming toward the market. Rabner pointed to the massive $7.3 trillion sitting in money market funds and said he thinks the floodgates will open and investors will pour that money into stocks. Rabner’s model predicts that billions of dollars ($29 billion to be exact) will flow into the market in the third quarter of 2024.
You don’t need a crystal ball to know where billions of dollars are headed. AI is the hot topic everyone is betting on, and everyone is betting on it: pundits, billionaires, asset managers, and long-term value investors. Fundstrat Global Advisors co-founder Tom Lee recently told CNBC that investors have been “hesitant” for most of the year, but should “stick” with “what’s working.” According to Lee, the topics that have been doing well lately are AI, weight loss drugs, and related topics.
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In this article, we’ve highlighted the top AI stocks that Wall Street analysts have recently upgraded or made bullish comments about. For each stock, we’ve included the number of hedge fund investors. Why are you interested in stocks that hedge funds are flocking to? The reason is simple: our research shows that by mimicking the top stocks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small and large stocks each quarter, and has returned 275% since May 2014, beating the benchmark by 150 percentage points. (Click here for details).
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Apple Inc. (NASDAQ:AAPL)
Number of hedge fund investors: 150
Gene Munster, a well-known Wall Street analyst and managing partner at Deepwater Asset Management, recently made headlines when he tweeted that Apple (NASDAQ:AAPL) is a better investment than NVIDIA in the long run. Munster believes that “holding Apple (NASDAQ:AAPL) for the next year will give you a higher return,” because the market is dismissing the potential of Apple’s (NASDAQ:AAPL) AI.
Wall Street is reaching the end of its patience with Apple Inc (NASDAQ:AAPL) as its AI strategy has so far been nonexistent and has lagged behind competitors. However, Apple Inc (NASDAQ:AAPL) bulls believe that Apple Inc (NASDAQ:AAPL) will win the AI race. The market is now waiting for the WWDC event where Apple Inc (NASDAQ:AAPL) is expected to announce its AI plans. Dan Ives of Wedbush, one of the biggest Apple Inc (NASDAQ:AAPL) bulls, recently said that WWDC is “Apple’s most important event in a decade as the pressure to deliver a generative AI tech stack for developers and consumers is at the forefront.”
Ives believes Apple (NASDAQ:AAPL) can build an ecosystem around its AI products, which he believes could boost the stock price by $30 to $40 per share. He has a price target of $275 for Apple (NASDAQ:AAPL).
Apple Inc (NASDAQ:AAPL) is trading at 27 times its 2025 EPS estimate, which is still a high multiple given Apple Inc (NASDAQ:AAPL)’s projected growth rate of 9.60% in 2025 and 10.50% annual growth rate over the next five years. However, all of this could change if Apple Inc (NASDAQ:AAPL) can pull off an AI-related catalyst. The WWDC event and the coming weeks and months will be crucial for Apple Inc’s (NASDAQ:AAPL) growth trajectory.
The first signs of Apple Inc’s (NASDAQ:AAPL) AI capabilities have emerged. Last month, Apple Inc (NASDAQ:AAPL) unveiled the new M4-powered iPad Pro, claiming that its device, equipped with the Neural Engine, will be “more powerful than any neural processing unit in any current AI PC.” Apple Inc’s (NASDAQ:AAPL) Neural Engine is Apple Inc’s (NASDAQ:AAPL) Neural Processing Unit (NPU) that accelerates AI workloads.
In its Q1 2024 investor letter, RiverPark Large Growth Fund said the following about Apple Inc. (NASDAQ:AAPL):
“Apple. (NASDAQ:AAPL): Apple shares were the biggest shareholder loser of the quarter. The company’s shares were weighed down by negative news, including a government antitrust lawsuit, an Apple Watch patent dispute, and slowing iPhone sales in China. Ultimately, the company’s Q1 2024 earnings report resulted in a slightly better-than-expected quarter, but the guidance disappointed investors. Revenue and gross margins for Q1 2024 were better than feared, driven by better-than-expected 6% growth in worldwide iPhone sales, despite a slight decline in iPhone sales in China. Services revenue for the quarter was in line with expectations, signaling a third consecutive quarter of accelerating growth. Gross margins also beat expectations, coming in at 45.9%, the highest in more than a decade. However, Q2 2024 revenue guidance of $90 billion was weak, due to challenging year-over-year conditions, including lower-than-expected iPhone sales in the quarter and lower sales of other hardware products compared to the same period last year.
“While near-term trends have calmed somewhat, Apple plans to run low inventory heading into the iPhone refresh cycle later this year. With an installed base of 2.2 billion active devices and strong growth in the company’s recurring revenue services division, we believe Apple will remain one of the most innovative, best-positioned and most profitable companies in the mobile technology industry.”
Overall, Apple Inc. (NASDAQ:AAPL) No.5 Insider Monkey’s List 10 AI Stocks That Analysts Are Upgrading. You can visit 10 AI Stocks That Analysts Are Upgrading To see other AI stocks analysts are watching, click here. While we acknowledge Apple’s potential, we believe smaller AI stocks have a better chance of delivering higher returns in a shorter time frame. If you’re looking for AI stocks with better prospects than Apple and trading for less than 5x, check out our report. Cheapest AI Stocks.
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Disclosures: None. This article was originally published on Insider Monkey.
