"The fact is, among the seven mega-tech stocks, Apple has underperformed this year, compared to all the others but one. Apple's stock is up about 7% this year. Among the Magnificent 7, only Amazon.com Inc. ( NASDAQ: AMZN) has a worse performance, with an increase of 5%. Every other stock on the list is up by mid-double-digits. Nvidia's advance is nearly 40%, and this leads the group. Alphabet Inc. ( NASDAQ: GOOGL) is up close to 30%."
"Apple's modest increase is due to strong iPhone 17 sales. There are reports that these have outpaced the iPhone 16. It appears that in the first 10 days after their releases, the iPhone 17 did better in China and the United States. It is also reported that Apple's high-margin Services business is growing rapidly, which would help make up for slow sales of iPads and Macs. What this means is that one strong number is offsetting two weak ones."
"Despite strong iPhone sales, negative views about Apple focus on only one thing. It does not have a strong artificial intelligence product, and management says it will not have one until next year. Rumors suggest that Apple has not been able to build a cutting-edge AI version of Siri. That puts its AI product behind those of Microsoft, OpenAI, and Google. Even smaller companies like xAI seem to have better AI products."
Apple's market capitalization sits just under $4 trillion and briefly reached $4 trillion during trading yesterday. Microsoft’s market cap surpassed $4 trillion and Nvidia’s is approaching $5 trillion. Apple has risen about 7% year-to-date, trailing six of the seven mega-tech peers; Amazon is the only laggard at roughly 5%, while Nvidia is up nearly 40% and Alphabet close to 30%. Strong iPhone 17 sales outpaced iPhone 16 in the first 10 days in China and the United States. Rapid growth in high-margin Services is offsetting weak iPad and Mac sales. Apple currently lacks a competitive AI product, with management projecting one next year, leaving it behind rivals and making unusually strong earnings and an optimistic AI forecast necessary to improve performance.
Read at 24/7 Wall St.
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