We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Should You Buy Apple ETFs on rebounding China's iPhone Sales?
Read MoreHide Full Article
In the past year, while some members of the 'Magnificent 7' have recorded strong quarterly results and solid price rally, Apple's performance has been less stellar. Despite the broader market's 23% gain, Apple's shares have increased by only 6.3%. This subdued performance is attributed to uncertainties surrounding China sales and Apple’s less exposure to AI compared to other “Mag 7” candidates.
Recent Positive Developments
However, there's been a recent uptick in Apple's performance. Over the last month, the company's shares have gained nearly 11% (compared with more than 4% gains noticed in the S&P 500), buoyed by positive reactions to its earnings report. Bloomberg reported a 52% increase in iPhone shipments in China last month, which further boosted Apple's share performance.
Apple's Latest Quarterly Results
In its latest quarterly release, Apple topped expectations, posting a 1.3% beat relative to the Zacks Consensus EPS estimate and sales 1% ahead of expectations. This marked the fifth successive double-beat for the tech giant.
Despite previous woes in China, Apple's sales in the region came in much closer to expectations compared to previous periods. While there was still a shortfall of $220 million against the consensus estimate, this is a significant improvement from the $2.5 billion miss in the previous period.
Positive Strategic Moves
Apple's recent announcements reflect efforts toward the maximization of shareholders’ wealth. The company revealed the largest buyback in corporate history, totaling $110 billion. Additionally, Apple announced a 4% boost to its quarterly payout, marking the 12th successive year of higher payouts.
Apple’s Increasing Focus on AI
Apple intends to push itself into generative AI (Gen AI) in 2024 by inorganic expansion. The company reportedly acquired Canadian AI startup DarwinAI earlier this year. Apple is preparing to transform Siri with advanced AI. The move will incorporate several features, including voice memo transcriptions and summaries, quick recaps of websites and notifications, automated message replies, advanced photo editing and AI-generated emojis, per Bloomberg, as quoted on straitstimes.
Price Target
Based on short-term price targets offered by 30 analysts, the average price target for Apple comes to $205.96. The forecasts range from a low of $164.00 to a high of $275.00. The average price target represents an increase of 7.13% from the last closing price of $192.25 as of May 31, 2024. Price/Earnings (TTM) of Apple is 29.90X versus a P/E ratio of 46.02X possessed by the underlying industry.
ETFs in Focus
Investors intending to follow latest improvements of Apple but still wary of its apparently slow-paced AI initiatives may take the ETF route. This is because ETFs help investors mitigate one company’s average performance with the other big tech companies’ stellar presence.
Below, we highlight a few ETFs with heavy exposure to Apple for investors seeking to bet on the stock with much lower risk.
Select Sector SPDR Technology ETF (XLK - Free Report) – AAPL holds the second spot with 19.10% weight. The fund has a Zacks Rank #1 (Strong Buy).
Vanguard Information Technology ETF (VGT - Free Report) – AAPL occupies the second location with 16.39% weight. The fund has a Zacks Rank #1.
iShares Dow Jones US Technology ETF (IYW - Free Report) – AAPL takes the second spot with 15.21% weight. The fund has a Zacks Rank #1.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Should You Buy Apple ETFs on rebounding China's iPhone Sales?
In the past year, while some members of the 'Magnificent 7' have recorded strong quarterly results and solid price rally, Apple's performance has been less stellar. Despite the broader market's 23% gain, Apple's shares have increased by only 6.3%. This subdued performance is attributed to uncertainties surrounding China sales and Apple’s less exposure to AI compared to other “Mag 7” candidates.
Recent Positive Developments
However, there's been a recent uptick in Apple's performance. Over the last month, the company's shares have gained nearly 11% (compared with more than 4% gains noticed in the S&P 500), buoyed by positive reactions to its earnings report. Bloomberg reported a 52% increase in iPhone shipments in China last month, which further boosted Apple's share performance.
Apple's Latest Quarterly Results
In its latest quarterly release, Apple topped expectations, posting a 1.3% beat relative to the Zacks Consensus EPS estimate and sales 1% ahead of expectations. This marked the fifth successive double-beat for the tech giant.
Despite previous woes in China, Apple's sales in the region came in much closer to expectations compared to previous periods. While there was still a shortfall of $220 million against the consensus estimate, this is a significant improvement from the $2.5 billion miss in the previous period.
Positive Strategic Moves
Apple's recent announcements reflect efforts toward the maximization of shareholders’ wealth. The company revealed the largest buyback in corporate history, totaling $110 billion. Additionally, Apple announced a 4% boost to its quarterly payout, marking the 12th successive year of higher payouts.
Apple’s Increasing Focus on AI
Apple intends to push itself into generative AI (Gen AI) in 2024 by inorganic expansion. The company reportedly acquired Canadian AI startup DarwinAI earlier this year. Apple is preparing to transform Siri with advanced AI. The move will incorporate several features, including voice memo transcriptions and summaries, quick recaps of websites and notifications, automated message replies, advanced photo editing and AI-generated emojis, per Bloomberg, as quoted on straitstimes.
Price Target
Based on short-term price targets offered by 30 analysts, the average price target for Apple comes to $205.96. The forecasts range from a low of $164.00 to a high of $275.00. The average price target represents an increase of 7.13% from the last closing price of $192.25 as of May 31, 2024. Price/Earnings (TTM) of Apple is 29.90X versus a P/E ratio of 46.02X possessed by the underlying industry.
ETFs in Focus
Investors intending to follow latest improvements of Apple but still wary of its apparently slow-paced AI initiatives may take the ETF route. This is because ETFs help investors mitigate one company’s average performance with the other big tech companies’ stellar presence.
Below, we highlight a few ETFs with heavy exposure to Apple for investors seeking to bet on the stock with much lower risk.
Select Sector SPDR Technology ETF (XLK - Free Report) – AAPL holds the second spot with 19.10% weight. The fund has a Zacks Rank #1 (Strong Buy).
Vanguard Information Technology ETF (VGT - Free Report) – AAPL occupies the second location with 16.39% weight. The fund has a Zacks Rank #1.
iShares Dow Jones US Technology ETF (IYW - Free Report) – AAPL takes the second spot with 15.21% weight. The fund has a Zacks Rank #1.