Apple defies tech sell-off with strong earnings, AI optimism

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.
Kenio Fontes for GuruFocus:
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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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