Meet Warren Buffett’s Top Artificial Intelligence (AI) Stocks That Have a 32% Advantage, According to Dan Ives

Helping to build Berkshire Hathaway in a nearly trillion dollar enterprise and co-founding the Giving Pledge charity are just a few things Warren Buffett is known for.

Despite his prolific career, one thing Buffett isn’t really known for is being a tech investor. In fact, many of his most famous and profitable investments came from simple businesses in financial services and consumer goods.

However, Buffett was a staunch supporter of it Apple (AAPL 0.12%) for almost a decade. Today, Apple is Berkshire’s largest holding — comprising about 30 percent of its portfolio.

Although Apple shares have seen significant gains since Berkshire’s initial purchase in 2016, some on Wall Street are calling for even more stock price appreciation. Notably, Wedbush Securities’ Dan Ives has a $300 price target on Apple stock — implying a 32% upside to the market close on Sept. 24.

Let’s explore some catalysts that could fuel Apple stock and assess whether there’s a good opportunity to buy the stock now.

Positive macro indicators

Over the past few years, high inflation and rising interest rates have weighed down the US macro economy. Additionally, as a global enterprise, Apple has also not been immune to some of the factors slowing down other major geographies, such as China.

In turn, consumers and businesses have tightened budgets and spending habits have changed. People have been more cost-conscious over the past couple of years, opting to forgo expensive new iPhones or MacBooks.

US Inflation Rate Data by YCharts

However, as inflation levels show signs of decelerating and the Federal Reserve begins to cut interest rates, consumer purchasing power should begin to strengthen.

Did someone say artificial intelligence?

Over the past few years, several megacap tech companies have made big splashes in the artificial intelligence (AI) arena. Apple was not one of those companies.

However, during a recent segment on CNBC, Dan Ives proclaimed that Apple is about to enter a “renaissance.” I agree.

For starters, Apple’s new iPhone 16 hit shelves last week. As mentioned above, many users in the Apple ecosystem have not updated their devices in the last two years. But with signs of economic improvement on the horizon, I think Apple is ready to recognize some pent-up demand in its new hardware.

In addition, I believe that Apple’s recent collaboration with OpenAI will bring two additional catalysts for the company.

First, the integration of OpenAI capabilities into its products helped spur the creation of Apple Intelligence. As the company begins to roll out new AI-powered services, I believe consumers will be inspired to upgrade and purchase Apple’s new product line.

Furthermore, Ives predicts that the relationship with OpenAI will be just the first in a series of AI-inspired partnerships for Apple. In particular, Ives calls for a settlement between Apple and Baidu. Baidu can be considered as the equivalent of Google in China. Such a deal could help reignite demand for Apple products overseas, particularly in China.

Whether or not a specific deal with Baidu will come to fruition is less important to me. On a higher level, I’m aligned with Ives’ thinking that OpenAI will be just one of a series of partnerships Apple strikes as it finally begins to break into the AI ​​market.

All of these factors could create a tailwind for Apple, which Ives calls a “supercycle.” In my eyes, Apple’s foray into AI could represent a key growth arc for the company.

Image source: The Motley Fool.

Should you buy Apple stock right now?

One downside to Apple stock is that it’s expensive right now. Right now, Apple’s price-to-earnings (P/E) ratio of 33.7 sits at a significant premium to S&P 500Its forward P/E of 22.9.

Additionally, forward P/E trends for the S&P 500 have been normalizing for some time. In contrast, Apple experienced a notable expansion in valuation.

AAPL PE ratio data (before) by YCharts

I bring this up because investors should understand that Apple’s stock has become more expensive despite its late entry into the tech industry’s newest frontier: AI. There’s a fair argument to be made that some of the AI-driven growth is already baked into Apple’s stock price.

Despite that narrative, I think the company’s growth since the new iPhone and Apple Intelligence in general is too heavy to call one way or the other right now. For these reasons, I wouldn’t underestimate Apple’s ability to command reactivated growth thanks to a resilient and restored consumer.

Longer term, I still see Apple as a compelling opportunity and think the stock is worth a close look right now.