Apple’s stock surged to a new all-time high as $237.23 following a strong third-quarter earnings report. The stock has fallen off its high, but is bucking a broader tech sell-off that more negatively impacted Microsoft and Amazon. Apple’s robust performance, fueled by growth in Services, iPads, and Macs, and optimism for an Apple Intelligence-fueled iPhone supercycle have solidified its premium valuation.
This new valuation level for Apple is justified by its responsibility for spreading artificial intelligence (or Apple Intelligence) technology through its strong user base and possible monetization from this, such as a better cycle for its hardware and maintaining the momentum of service revenue.
While only the newest iPhones will be able to make full use of Apple Intelligence features, Macs with Apple Silicon since 2020 will have these features…
[M]anagement’s expectation is that in the fourth quarter, revenue will grow at the same rate as in the third, which was close to 5%. In addition, they believe the gross margin will be between 45.50% and 46.50%, which is also close to what was recorded last quarter. This guidance was higher than expected by Wall Street…
I believe the third quarter was a tipping point for Apple. The company appears to have returned to growth (albeit below other big techs) and managed to catch up with its peers in the AI race, which makes the outlook for the medium and long term much better.
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MacDailyNews Take: The quicker Apple can bring out high quality Apple Intelligence features, the better!
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WTF? That happened almost a month ago.
Apple seems to be doing OK with its consumer product sales despite the high consumer credit debt and mass layoffs of many consumers. I’m not going to criticize Apple for not breaking any sales records in a weak economy. I’m not that stupid or greedy. I’m glad Apple has a chance to buy back shares to lower the share count. I’m also glad Apple isn’t going overboard in A.I. spending as most tech companies are doing. Those other tech companies are just praying that all that spending on A.I. infrastructure is going to bring them untold wealth which is just a gamble. Those companies are going to have to figure out how to monetize A.I.
I don’t care if big investors aren’t interested in Apple’s consumer A.I. strategy because they don’t think Apple will have massive gains like those other tech companies that have spent tens of billions of dollars on A.I. hardware.
Apple has 2.2 billion active devices and Apple might be able to have an A.I. subscription model that will bring them consistent Services revenue. We’ll just have to wait and see.