iPhone maker Apple’s AAPL stock has been hovering around a record high recently, reflecting bullish price action. The stock is up 27.4% this year, way lower than one of the most talked-about Mag 7 members NVIDIA Corp. NVDA (up 198% year to date).
Apple shares have, however, gained momentum in recent weeks. The AAPL stock is expected to report quarterly results on Oct. 31 after market close.
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What’s Behind the Latest Rally?
Apple unveiled its iPhone 16 smartphone lineup, as well as new models of the Apple Watch and AirPods, on Sept. 9. The iPhone 16 lineup reflected Apple’s take on artificial intelligence, namely Apple Intelligence. The iPhone 16 also has an AI application called Visual Intelligence (read: Bet on “Apple Intelligence” With These ETFs).
Morgan Stanley analyst Erik Woodring said iPhone lead times, a proxy for smartphone demand, are “encouraging” and last month’s 56 million iPhone shipment was about 10% higher than expected. This would result in about $2.5 billion in marginal quarterly revenue upside, as quoted on Forbes. Apple also recently announced its first new iPad Mini tablet since 2021, a model emphasizing AI applications.
Price Target
Based on short-term price targets offered by 34 analysts, the average price target for Apple comes to $245.13. The forecasts range from a low of $184.00 to a high of $300.00. The average price target represents an increase of 4.31% from the last closing price of $235.00 on Oct. 20.
Should You Buy Apple Shares At All?
Investors should note that the rollout of Apple Intelligence is slow. Apple’s iPhone 16 smartphones officially went on sale on Sept. 20, but Apple Intelligence won’t be available until late October, as quoted on investors.com. And even then, the AI features will be limited and in “beta” or test mode. Wall Street analysts described Apple Intelligence as “not quite ready for prime time” and “not a fully baked offering,” per investors.com.
On Aug. 3, Warren Buffett’s Berkshire Hathaway (BRK.B) disclosed a massive sale of its Apple stake. Berkshire Hathaway cut its stake in Apple by 49% in the second quarter (read: ETFs in Focus as Buffett Cuts Apple Stake by Nearly 50%).
Magnitude – Consensus Estimate Trend
Apple’s earnings estimate for the upcoming quarter fell to $1.54 per share from $1.60 per share in the last 30 days. For the full fiscal year, the earnings estimate fell to $6.65 from $6.70 per share.
Image Source: Zacks Investment Research
Should You Play Apple Stock With ETFs?
Since there are still uncertainties related to the success of Apple’s AI rollout, it is better to track the company with the exchange-traded fund (ETF) approach. The basket approach minimizes the company-specific concentration risks.
Apple-heavy ETFs include the likes of Technology Select Sector SPDR Fund XLK, iShares Global Tech ETF IXN and iShares U.S. Technology ETF IYW. And if you are too bullish on the Apple stock, then you can invest in leveraged ETFs like T-Rex 2X Long Apple Daily Target ETF AAPX.
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