By Dan Gallagher
Apples largest business is struggling, while the company is also losing ground in China and seems to have completely missed Big Techs AI party. That might make now a good time to buy the stock.
Apples share price jumped more than 3% Monday morning after Bernstein analyst Toni Sacconaghi upgraded the stock to a buy rating. A Heard on the Street column also published Monday morning noted that the stock has been a weak performer this yearespecially relative to other big tech shares that have been lifted by the markets enthusiasm for generative artificial intelligence.
Worries about the latest iPhone cycle, China, regulatory pressure in the U.S. and Europe and the companys unclear plans for its own AI play have all combined to push Apples multiple to around 25 times forward earningsin line with its five-year average, according to FactSet data. Buy the fear, was Sacconaghis advice in his note to clients.
The stocks weakness gives Apple an easier setup heading into its fiscal second-quarter report, slated for Thursday afternoon. That report and the companys outlook for the June quarter are unlikely to impress; Sacconaghi thinks Apple could project around $80 billion in revenue for the June quarter, which is lower than Wall Streets current forecast of $83.2 billion.
But the company is also heading into a season where its stock tends to do well. Apple will host its Worldwide Developers Conference in early June, where it is expected to lay out more about its vision for AI. It is also expected to introduce the iPhone 16 family in September. We further believe that replacement cycle tailwinds and incremental generative AI features set up Apple well for a strong iPhone 16 cycle, Sacconaghi wrote.