The top row or line
Apple investors may be riding high after the iPhone maker's stock enjoyed a historic week, but Wall Street forecasts point to more upside for Apple's share price. May not even be walking among artificial intelligence daydreams.
Apple's bottom line is extremely strong, but it will likely need to grow more than forecast. … [+]
Key facts
First good news: Apple stock closed at a record high for the weekend at $212.49 per share, its third-biggest percentage-point weekly gain in the past two years and its second-biggest dollar-per-share weekly rally of the past decade. The technology comes after the company introduced its Creative Artificial Intelligence offering later this year.
While analyst reactions were largely positive, focusing on the potential for a shock to iPhone sales, the consensus doesn't bode well for Apple stock.
The average price target of 48 analysts tracked by FactSet is $204.89 per share, down about 4% from Friday's price, and the nine targets updated this week come in at a lighter average of $201.56, up 5 % represent reduction.
And even Wall Street's most bullish analysts aren't predicting big gains for Apple stock, as analysts at buy-rated Goldman Sachs and Bank of America have set targets of $238 and $230, respectively. That's asking for 12% and 8% profit for Apple. share price.
Not exactly exciting considering the S&P 500 has provided investors with an average annualized return of 13% over the past decade, with Apple returning 26% on an annualized basis.
Get Forbes Breaking News text alerts: We're launching text message alerts so you'll always know the biggest stories shaping the day's headlines. Text or sign up for “Alerts” at (201) 335-0739. Here.
Key background
Stock price targets, which can often be slow to move or react to past moves, are an inexact science, but certainly indicate the prevailing perception that Apple's stock has reached its potential. Prices have increased more than The most notable upside to Apple stock is its steady earnings growth, as consensus forecasts expect the company to grow sales this year by just 1% over its 2023 fiscal year and 2022 to a record $394 million. Billions in revenue will fall by 2%. While it might be expected that an established company like Apple would have weaker growth than a company in a new industry like Nvidia, Apple's sales growth lags that of fellow tech big-shot Microsoft, which topped 16 percent this fiscal year. Line growth will report. Last year its business has increased by 7%. Apple's 2023 fiscal year net income of $383 billion and revenue of $97 billion beat Microsoft's $212 billion and $73 billion, but consensus forecasts call for Microsoft to overtake Apple in profits by 2026 and sales by 2028. Demands. Keeping Apple on top until 2028, which would be hard to believe two years ago, when Nvidia took about one-twentieth of Apple's annual profits. Remember, investors pay mostly for the potential for future earnings, not for past results.
So why is Apple stock rising?
Before Monday, Apple didn't do much in the way of addressing its plans for creative artificial intelligence as the likes of Microsoft and Google made a big splash. This week's shock came as the market braced for the prospect of a massive upgrade cycle among the world's 1.5 billion iPhone users. And given the large, loyal user base it's not hard to imagine the potential for further AI development untapped with Apple products. Goldman Sachs analyst Michael Ng declared that this week was “the first step of many in Apple's creative AI strategy.”
Tangent
Nvidia stock's spectacular rally, which has tied the AI ​​semiconductor chip designer with Apple in terms of market valuation, shouldn't affect Apple's share price in a vacuum. But if Microsoft and Nvidia stocks continue to outperform Apple, there could be further downward pressure on Apple shares as exchange-traded funds that track a market-cap-weighted index adjust their holdings, L.P. LK Financial Strategist George Smith warned in a note to clients this week. Basically, the money has to come from somewhere if investors want to continue to buy Nvidia in large numbers, which could force normal sales of Apple shares.
Further reading