To The Moon

Apple's $Apple(AAPL)$  trajectory in 2024 has been distinctively different compared to some of its tech counterparts like Alphabet and Amazon. While these peers have seen their stocks take a breather after strong rallies, Apple is defying this trend, with its shares trading near record highs. This newfound momentum comes after a prolonged period of stagnation from early 2022 to April 2024, marking a significant shift in investor sentiment.

The AI-Driven Resurgence

The turning point for Apple has been its strategic entry into the artificial intelligence (AI) space. Although the company was somewhat late to embrace AI compared to its competitors, the launch of "Apple Intelligence" in June 2024 has reinvigorated the market’s perception of Apple. This cutting-edge technology enables the latest iPhones and iPads to operate as fully functional generative AI devices without relying on cloud computing, setting them apart from the majority of consumer-grade AI tools.

This innovation is not just a technological upgrade; it represents a potential game-changer for Apple’s flagship product, the iPhone. With Apple Intelligence, the company is poised to reignite iPhone sales, both in terms of revenue and unit sales, reversing the stagnation that had plagued this product line in recent years.

Market Outlook and Potential

The market research firm IDC has provided some compelling projections, estimating that global deliveries of AI-capable smartphones will skyrocket from 234 million units in 2024 to over 900 million by 2028. By then, nearly 80% of the global mobile phone market will be dominated by these advanced devices. Given that the iPhone is already the world's most popular smartphone, Apple is well-positioned to capture a substantial portion of this growth.

Strategic Implications for Apple

While the expected boost in iPhone sales is undoubtedly a positive development, there’s a potentially even more lucrative opportunity on the horizon for Apple—its services segment. As more consumers adopt AI-capable iPhones, the ecosystem that Apple has meticulously built will likely see a surge in usage, driving up services revenue. This segment, which is already Apple’s second-largest business, boasts the highest profit margins, making it a critical growth driver for the company moving forward.

Conclusion

Investing in Apple on 30 August 2024 was a calculated move rooted in the company’s resurgence driven by its AI advancements. Apple’s ability to pivot and innovate in a rapidly evolving tech landscape not only positions it for near-term gains but also ensures long-term growth potential. As the adoption of AI-driven smartphones accelerates, Apple is set to capitalize on both hardware and services revenue, making this a strategically sound investment.

$Apple(AAPL)$