This ‘Magnificent Seven’ Stock Could Become The World’s First $4 Trillion Company By 2024

Apple (NASDAQ:AAPL) is the most valuable company in the world right now, with a market cap of nearly $3.3 trillion, but the tech giant’s stock has outperformed some of the other big tech names so far this year.

Apple, along with Amazon, Nvidia, Microsoft, Alphabet, Meta platformsand adzeare the top seven technology-focused companies that have played a central role in driving the stock market’s rise over the past year and a half. They are collectively known as “The Magnificent Seven”. It’s worth noting that some of them, such as Nvidia, Meta and Alphabet, posted stronger gains than the market in 2024.

However, it won’t be surprising to see Apple stock go full throttle in the final stages of 2024 and eventually hit the $4 trillion market cap threshold, which is 21% away from its current valuation .

AI is likely to increase Apple’s sales

Apple has yet to introduce artificial intelligence (AI)-enabled smartphones, compared to rivals like Samsung and other Chinese OEMs, which have already jumped on the bandwagon. However, that may change next month when the company releases the next generation of iPhones, which are set to support the company’s generative suite of AI features known as Apple Intelligence.

The tech giant introduced Apple Intelligence in June this year, noting that this platform will be “deeply integrated into iOS 18, iPadOS 18 and macOS Sequoia.” Apple Intelligence has a number of generative AI features that could trigger a new upgrade cycle, encouraging users on older devices to upgrade to the latest iPhones.

JP Morgan analyst Samik Chatterjee believes the next iPhone will start a new upgrade cycle that will last beyond Apple’s 2025 iPhone generation. More specifically, the analyst estimates that Apple could see a 10% increase in iPhone unit sales in fiscal 2025 to 244 million units. Apple’s 2025 fiscal year will begin at the end of next month and will coincide with the launch of its AI iPhones.

JP Morgan sees iPhone sales rising to 268 million units in fiscal 2026, indicating that the upgrade cycle will intensify when the company updates its lineup next year. The good news for Apple investors is that the iPhone isn’t the only device to get an AI injection. Apple Intelligence will also be available on MacBooks.

These markets could unlock another solid growth opportunity for Apple. For example, the generative AI personal computer (PC) market is expected to grow from annual shipments of 48 million units in 2024 to 205 million units in 2028. The addition of Apple Intelligence to the company’s Mac operating system puts it in -well positioned to take advantage of this long-term secular growth opportunity.

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All of this indicates that Apple could be at the beginning of a new growth curve that could eventually help the stock regain its mojo and head higher over the long term. However, a closer look at recent sales numbers from Apple’s key chip-making partner indicates that it won’t be long before the tech giant hits a $4 trillion market cap.

A key sign that Apple is gearing up for an aggressive iPhone launch with AI

The processors that power Apple’s iPhones are manufactured by the foundry giant Taiwan Semiconductor Manufacturingknown as TSMC. Apple is said to be TSMC’s biggest customer, accounting for 25% of the top line last year. The tech giant is reportedly one of the companies that has completely reserved the supply of 3-nanometer (nm) chips to the Taiwanese company.

With Apple’s iPhone 16 models set for 3nm processors, it’s no surprise to see rumors that the company has ordered more chips from TSMC. Reports suggest that Apple’s iPhone 16 production in 2024 could be 10% higher than the number of iPhone 15 models it produced in 2023. This is probably why TSMC recently reported a tremendous increase of 45% of its revenue for July. .

By comparison, TSMC’s July revenue was down nearly 5% year-over-year in 2023. Of course, Apple may not have been the only customer driving TSMC’s revenue growth last month. However, since the iPhone maker is TSMC’s biggest customer, there is a good chance that it will increase its chip orders in a bid to aggressively launch its next-generation smartphone lineup.

This would be a smart thing to do as generative AI smartphone shipments are expected to grow 364% this year to 234 million units. Since Apple’s AI-capable iPhones will hit the market just in time for the holiday season, they could witness stronger demand than expected. As a result, Apple’s growth in the last six months of 2024 could exceed Wall Street’s expectations.

According to a consensus of 49 analysts who cover Apple, the stock has a 12-month average price target of $250, which would be a 16% upside from current levels. However, an acceleration in Apple’s growth thanks to artificial intelligence could help the stock post much stronger earnings as early as 2024 and move closer to its $300 price target, which will be more than enough to become the first company to 4 trillion dollars from the world by the end. of the year.

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Suzanne Frey, chief executive at Alphabet, is a member of the Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a board member of The Motley Fool. Randi Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing and Tesla. The Motley Fool recommends the following options: long $395 January 2026 Microsoft calls and short $405 January 2026 Microsoft calls. The Motley Fool has a disclosure policy.

Prediction: This ‘Magnificent Seven’ Stock Could Become the World’s First $4 Trillion Company in 2024 was originally published by The Motley Fool