Apple stocks surged by nearly 7% on Friday, fueled by the company’s record stock buyback plan and promising sales growth, which attracted investors who had been avoiding the stocks due to concerns about weak demand and increased competition in China.
Late on Thursday, the company approved an additional $110 billion stock buyback, the largest ever, and forecasted third-quarter sales that exceeded modest market expectations.
The company was on track to add over $170 billion to its market value if stock gains continued.
The forecast indicated Apple’s confidence that product updates, starting from the May 7 iPad event, would lead to increased demand for its hardware business after months of sluggish growth that had some investors questioning its indispensable status as a stock holding.
Josh Gilbert, an investment analyst, said, “Many investors began to wonder if Apple still had what it takes to achieve the highest level of growth they’ve grown accustomed to over the years, but CEO Tim Cook worked his magic and reassured investors.” on eToro platform.
The buyback operation brought Apple in line with other American tech giants who showered investors with cash this earnings season to calm fears about increased investments in industrial artificial intelligence. Some analysts also saw it as a sign that the industry is maturing.
Danny Hewson, head of financial analysis, said, “Growth stocks must prove they still grow at a pace satisfying their shareholders. Once this growth slows down, and Apple serves as a prime example, buybacks or dividends can convince investors to maintain their confidence.” at AJ Bell.
Unlike Alphabet and Microsoft, Apple didn’t see a rise in costs as it didn’t make significant investments in artificial intelligence. However, the slow rollout of AI services was penalized by investors, partially leading to a 10% decline in its share price this year.
CEO Cook stated that Apple plans to share “some very exciting things,” raising expectations among many analysts that Apple will announce artificial intelligence integrations at the upcoming annual developer conference, expected to be the largest ever.
Bernstein analysts said they expect “a strong cycle for the iPhone 16, supported by AI features, along with long replacement cycles.”
At least 13 analysts raised their price targets for Apple, raising the average offer to $200, up 15% from the stock’s recent closing price.
Apple stocks trade at 25 times future earnings estimates for the next 12 months, compared to 30.5 for Microsoft. The Windows system manufacturer had overtaken Apple as the world’s most valuable company earlier this year, thanks to its efforts in the field of artificial intelligence.