Apple in a High Altitude Rush: AI Drives Stock to Record Levels

Apple has regained its position at the top of the stock market. The tech giant reached a market capitalization of $3.9 billion in December and is currently benefiting from the euphoria surrounding Apple Intelligence, its new generative AI technology integrated into iOS. Additionally, the market assumes that the Trump administration might be more lenient regarding regulations of large tech companies. Although the Department of Justice is currently investigating Apple's monopolistic behavior within the closed Apple ecosystem, this could change with new leadership at the DOJ. Amidst this price surge, a Wall Street analyst has raised his price target to a record high of $325 and continues to recommend buying the stock. Dan Ives from Wedbush is one of the biggest proponents of the AI boom and considers Apple one of the winners. He predicts a super cycle led by the release of the iPhone 16 and Apple Intelligence. Ives believes the potential of the new AI platform and the resulting revenue increases in the service sector are underestimated. Additionally, sales figures in China seem stronger than expected, which is a positive sign according to Bloomberg, as this is one of Apple's most important markets. However, Apple stock is currently valued as highly as it hasn't been in a decade, with a price-to-earnings ratio of 41. Given the expected growth rate, this value is difficult to justify, as revenue in the fourth quarter only increased by 6% to $94.9 billion, and earnings per share could increase by 12%. While Apple enjoys significant competitive advantages, the company needs growth for the stock to rise further. If Ives is correct in his assessment regarding Apple and AI, the price could climb higher. But given the current valuation, there is equally a risk of a decline. Before you invest in Apple, consider this: According to the Stock Advisor team from The Motley Fool, 10 other stocks currently hold the best buying opportunities, but Apple is not among them. These selected securities could yield substantial returns in the coming years.