3 Reasons to Buy Apple Stock Like There’s No Tomorrow

Apple (AAPL 1.03%) it has long been known for its growth. The company’s stock has risen 800% over the past decade, massively outperforming S&P 500183% increase. Almost unmatched brand loyalty and a cash-rich business have allowed the company to reach historic heights.

Macroeconomic headwinds and declining product sales have challenged the company over the past year. General reductions in consumer spending power and an increase in chip performance over the years that has canceled annual product upgrades have forced Apple to rethink its business.

As a result, the tech giant has turned to the burgeoning artificial intelligence (AI) market. Meanwhile, Apple is gradually shifting from third-party chips to in-house developed hardware, improving profit margins and taking more control over the design of its products.

The company appears to be entering a new chapter in its growth story and could see its stock hit record highs in the coming years. So here are three reasons to buy Apple stock like there’s no tomorrow.

1. The advantages of switching to internal tokens everywhere

For more than a decade, Apple has used Qualcommthe modem chips of his iPhones. However, in 2018, the company began designing its own modem to eventually move its smartphones entirely to homegrown chips. And that time could be right around the corner, with Apple’s current deal with Qualcomm ending in 2027.

The move away from third-party modems came after Apple began shifting its entire Mac line from Intel processors to its custom-designed Apple Silicon M line of chips in 2020. This decision was a massive success for Apple, allowing it to offer some of the most powerful and efficient home computers on the market. Meanwhile, Mac sales are up 31% since Apple’s Silicon announcement four years ago.

There are several reasons for Apple to switch to in-house chips in general. First, it improves profit margins by massively reducing chip costs. It may still need to pay royalties to Qualcomm to avoid patent infringement, but the total cost should be far less than paying the company per modem. However, this could change in the long run as Apple may create a new chip that combines Wi-Fi and Bluetooth connectivity while improving battery life.

Meanwhile, taking full control of its chips allows Apple to design products more efficiently, with authority over nearly every aspect of the devices. This gives the company more creative control, allowing more room for creativity and innovation.

Being responsible for its iPhone modems, the company could expand its smartphone lineup with products that are foldable, capable of artificial intelligence, and offer a better user experience. As a result, consumers may be more motivated to upgrade in the coming years, boosting Apple’s earnings and stock price.

2. Improving its entire business with AI

In addition to restructuring its chip division, Apple has made a massive push into AI in 2024. The company is revising its product lineup to expand its AI offerings and become the go-to point for consumers who need AI-enabled devices.

Next month, Apple will unveil the iPhone 16, its first smartphone designed with AI in mind. The release will be followed by the release of Apple Intelligence, its name for a massive update to its operating systems. Apple Intelligence will bring language, text and image generation tools to iPhone, Mac and iPad. Meanwhile, Siri has been completely reworked to have a richer understanding of language and will give users access to OpenAI’s ChatGPT for specific questions.

Apple Intelligence will only be available on the company’s newer devices, including iPhone 15 Pros and higher and Macs/iPads equipped with Apple Silicon chips. Apple expects the move to encourage a number of upgrades for consumer products.

However, upcoming releases appear to be just the beginning of Apple’s journey into AI. Analyst Craig Moffett of Moffett Nathanson Research expects Apple to “eventually support a paid digital assistant, providing another boost to their very high-margin Services business.”

Services is by far the company’s most profitable division, with gross margins of 74%. Meanwhile, the segment is expanding rapidly, posting 14% year-over-year revenue growth in the third quarter of 2023. Adding paid AI features to its digital product catalog could massively strengthen the services division.

3. Potentially better valued than other AI stocks

Data by YCharts

This chart shows that Apple is potentially a bigger deal than some of its AI peers. The company has a lower price-to-earnings (P/E) and price-to-free cash flow ratio than some of the industry’s most prominent names, indicating that its stock offers the most value.

Aside from a promising shakeup in its chip supply chain and a push into AI, Apple’s stock is quite a bargain right now — and one to buy like there’s no tomorrow.