Apple, the iconic iPhone maker, is experiencing a slight decline in its shares as bond yields increase. The technology giant's performance in the field of artificial intelligence is being closely watched, and it faces pressure to demonstrate its readiness to compete in this rapidly evolving market.
In premarket trading on Wednesday, Apple was down 0.4% at $184.84. This follows a 3.6% fall the previous day, triggered by a downgrade from Barclays and the impact of rising bond yields on the stock and the wider technology sector. The selling to harvest tax gains may have also contributed to this decline. However, it is important to note that despite these recent developments, Apple's shares have only dipped slightly from their record closing high of $198.11 on Dec. 14. Moreover, over the past year, the stock has soared by an impressive 47%, marking significant growth.
To justify further gains, Apple, alongside the other influential stocks known as the 'Magnificent Seven' that fueled last year's rally, must demonstrate its ability to deliver sustainable growth. According to D.A. Davidson analyst Gil Luria, Apple needs to regain its innovative momentum and enhance growth in its existing products while introducing new ones. In a research note, Luria maintained a Neutral rating on the stock and set a $166 target price.
Luria expressed confidence that Apple will experience moderate growth this year, driven by its Services division and favorable factors such as a shorter quarter, looser supply chain comparisons, and loosened Chinese restrictions.
In order to prove its continued ability to innovate, one pivotal area for Apple is the field of artificial intelligence. While there have been reports that Apple plans to invest billions of dollars in Nvidia chips to advance its AI efforts, including a revamped Siri digital assistant, the company has yet to disclose detailed information about its projects.
Luria stated in his note that Apple possesses an unrivaled advantage with its vast consumer data set, enabling the company to provide new applications and experiences rooted in artificial intelligence. Although current applications may seem modest, such as message auto-complete, Luria believes that Apple has the potential to leverage its unique resources to drive innovation and deliver groundbreaking AI solutions.
In conclusion, while Apple currently faces some challenges, its overall growth trajectory remains impressive. The company's success will hinge on its ability to navigate the evolving landscape of technology and prove its commitment to innovation, particularly in the field of artificial intelligence.
