The current bull market is driven by the Magnificent Seven. If there's one trend he sees driving up the stock prices of big tech companies, it's artificial intelligence (AI).
Almost every member of the Magnificent Seven has deep ties to current advances in AI.
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Nvidia is a leading GPU chip designer, supplying a growing number of data centers designed to train large-scale language models.
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microsoft, Amazonand alphabet (NASDAQ:GOOG) (NASDAQ:Google) is a leading public cloud provider, giving developers access to the foundational models for creating new AI-powered apps. All three companies have also invested heavily in their own large-scale language models and chip designs.
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meta platform has developed LLaMA, the leading large-scale language model, and is spending billions of dollars in data centers to train and implement AI across its apps.
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tesla is racing towards a robotaxi service powered by massive investments in AI.
Only one of the seven members remains exceptionally silent about AI. apple (NASDAQ:AAPL). iPhone makers typically don't like to talk about what they're developing until it's ready for release. But things may change this summer.
Analysts believe Apple will make some big AI-related announcements this year. One analyst also predicts that AI-related products and services could push the company's stock price to $225, about 33% higher than its price at press time.
Summer of Apple AI
american bank Analyst Wamusi Mohan sees Apple's recent drop in stock as a great buying opportunity ahead of the company's typical event schedule this summer.
He expects Apple to make a series of AI-related announcements at its annual Worldwide Developers Conference in June. At the company's annual shareholder meeting, CEO Tim Cook promised investors that Apple would “break new ground” with generative AI this year. Now Cook is set to announce some big products and services.
No one knows what Apple will announce. Management says it's spending a lot of time and money on generative AI, but hasn't provided many details.
Last month, multiple reports surfaced that Apple was in talks with Google to bring Gemini AI to iPhones and other devices. Such a deal could be a big win for Alphabet, as the company's AI efforts are dwarfed by those of its competitors.
But putting someone else's AI chatbot on your iPhone is by no means “breaking new ground.” Investors should expect more.
However, that may have to wait until late summer, when Apple unveils new iPhones. Mohan expects 2024 iPhone models (likely the iPhone 16) to offer on-device generative AI capabilities.
This could be a major advancement for Apple's main focus on AI and data privacy. Being able to run AI apps on smartphones without sending data to a server for processing could open the door to more AI-powered apps and AI App Stores.
Apple is uniquely positioned to offer these capabilities on its own hardware because it designs its own chips that are some of the most advanced mobile processors available. Plus, it's specifically designed to run Apple software efficiently. As such, it plays a key role in bringing on-device AI to the mass market.
Should you buy Apple before the next big announcement?
The company's stock has been one of the worst performing stocks in the Magnificent Seven since early 2024. The stock price is down more than 12%. Only Tesla stock has performed poorly, all other members have made positive returns. S&P500 index.
However, the current price decline could present a golden opportunity for investors. The company's stock currently trades at just 25.6 times forward earnings. This multiple is higher than the S&P 500, but lower than most other members of the Magnificent Seven.
Additionally, Apple's strong cash position and large capital return program give investors good reason to pay a premium for the company's stock. Mohan believes the company's capital return program is another potential catalyst for share price growth.
The stability of the iPhone and services business makes Apple a great company to own, even if the company doesn't offer much to get investors excited about when it comes to AI. Adding new artificial intelligence capabilities could push the stock price even higher, especially if it brings innovation. At current prices, Apple stock appears to have more upside than downside.
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Alphabet executive Suzanne Frye is a member of The Motley Fool's board of directors. Bank of America is an advertising partner of The Motley Fool's Ascent. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool's board of directors. Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Adam Levy has held positions at Alphabet, Amazon, Apple, Meta Platforms, and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Bank of America, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
Artificial intelligence could boost stocks of the Magnificent Seven by 33%, says Wall Street analyst Original article published by The Motley Fool
