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ETFs to Tap Apple's Potential AI-Based Growth

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At the “It’s Glowtime” event, Apple (AAPL - Free Report) introduced four versions of iPhone 16 based on AI, the Watch Series 10, a new Watch Ultra and the AirPods lineup. The new AI-based iPhones are expected to kickstart the next big upgrade cycle, enhancing the company's performance and restoring investor confidence in Apple. Analysts turned bullish on the stock, with a few lifting their target price (read: Apple Gears Up for Glowtime Event: ETFs in Focus).

Investors seeking to tap the potential growth should consider ETFs having the largest allocation to the tech titan. Vanguard Information Technology ETF (VGT - Free Report) , MSCI Information Technology Index ETF (FTEC - Free Report) , iShares US Technology ETF (IYW - Free Report) , iShares Russell Top 200 Growth ETF (IWY - Free Report) and Vanguard Mega Cap Growth ETF (MGK - Free Report) have Apple as the top or second firm with a double-digit allocation. These ETFs have a Zacks ETF Rank #1 (Strong Buy) or 2 (Buy).

Insights Into the New Launch

iPhone 16: The iPhone 16 lineup includes the iPhone 16, iPhone 16 Plus, iPhone 16 Pro, and iPhone 16 Pro Max, all integrated with Apple Intelligence and visual search. 

The iPhone 16 and 16 Plus are powered by the A18 Bionic chip and feature several upgrades, such as five new color options, a customizable Action Button and a new Camera Control button. The iPhone 16 Pro and Pro Max come with larger displays — 6.3 inches and 6.9 inches, respectively — and are powered by the advanced A18 Pro. 

The price of iPhone 16 will start at $799 while 16 Plus starts at $899. The Pro model starts at $999 for 128 GB, while the Pro Max begins at $1,199 for 256 GB. Both models will be available for pre-order on Sept. 13 and officially be on sale from Sept. 20. Apple Intelligence will also be available starting next month, including on older devices iPhone 15 Pro and 15 Pro Max.

AirPods: Apple launched two versions of AirPods globally — the AirPods 4 model with active noise cancellation and an upgraded AirPods Pro 2 with built-in hearing aid functions. The new AirPods 4 models aim to replace the second and third-generation AirPods. The highlights include a Type-C port for charging and a revamped design for a more comfortable fit. AirPods Pro 2 includes new hearing protection features, reducing louder, more intermittent noise while still preserving the sound of what you're listening to (read: Is Apple Stock "Under-owned"? ETFs in Focus). 

Apple Watch 10: Apple Watch Series 10 will be the thinnest yet — making it more comfortable than ever — and offers the biggest, most advanced display of any Apple Watch. It also features new sleep apnea notifications, faster charging, water depth and temperature sensing, plus new health and fitness insights and intelligence in watchOS 11. Apple Watch Series 10 is available in both aluminum and titanium.

Analysts Turn Bullish

Following the "Glowtime" event, a few analysts raised their target price on Apple. Wedbush, a longtime Apple bull, has become more optimistic about the growth potential of the company due to the introduction of Apple Intelligence on iPhone sales. It lifted the price target by $15 to $300, citing that Apple is making a big bet that AI technologies will reverse the ongoing decline in iPhone sales.

Wedbush believes Apple’s biggest upgrade cycle is about to start. Globally, about 300 million iPhones have not been upgraded in more than four years, which Wedbush says could mean more than 240 million iPhone units sold in fiscal 2025.

Currently, Apple carries a Zacks Rank #3 (Hold) and has a Growth Score of B, suggesting that the iPhone maker is primed for growth. Apple stock is relatively cheap, trading at a P/E ratio of 32.99 compared with Amazon’s (AMZN) 36.97 times and Netflix’s (NFLX) 35.39 times (see: all the Technology ETFs here).

ETFs in Focus

Vanguard Information Technology ETF (VGT - Free Report) - Apple accounts for a 17.2% share.

MSCI Information Technology Index ETF (FTEC - Free Report) - Apple accounts for a 17.5% share in the basket. 

iShares US Technology ETF (IYW - Free Report) - Apple makes up 16.7% of the assets.

iShares Russell Top 200 Growth ETF (IWY - Free Report) - Apple accounts for a 14% share in the basket.

Vanguard Mega Cap Growth ETF (MGK - Free Report) - Apple accounts for 13.4% of the total assets.

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