The company's AI strategy has eased concerns that have weighed on the stock this year, with many believing that AI represents the kind of must-have features that will prompt users to trade up. Despite a 4.3% fall in Apple's fiscal second-quarter revenue, the company's shares are trading at about 30 times estimated earnings, above its long-term average. The integration of AI features is expected to drive broader adoption and growth, with Apple being uniquely positioned to offer these capabilities.
Key takeaways:
- Apple Inc. investors are optimistic about the company's roadmap for using artificial intelligence, pushing the stock to its best week in over two years and adding about $239 billion in market value.
- Apple's agreement with OpenAI to integrate ChatGPT into new iPhone AI features is expected to trigger a massive upgrade cycle among users holding on to older devices.
- Despite a 2% fall in iPhone revenue last year, AI is seen as the key innovation that will spur the next cycle of iPhone sales, potentially leading to iPhone revenue growth of about 20% for up to 2 years.
- Apple's tech dominance, along with Microsoft and Nvidia, has led to the tech sector representing 32.6% of the S&P 500, the highest ratio since the dot-com era in 2000.