Retirees: This Warren Buffett stock offers a more stable path to AI growth

of Warren Buffett Berkshire Hathaway (NYSE:BRK-B) may have unloaded much of the Apple (NASDAQ:AAPL) stock this year. Still, there are plenty of reasons to hang on as the Oracle of Omaha takes profits, likely for tax purposes and to reduce overconcentration risks.

Undoubtedly, Apple stock looks historically expensive, with shares currently trading at just under 35 times its trailing price-to-earnings (P/E) ratio. The first is largely attributed to the upcoming release of iOS 18.1 – the update that includes Apple Intelligence – which will set the tone for the new year.

Key points about this article

• Apple stock appears to remain below an all-time high, but a breakout may not be far off.
• Early iPhone 16 sales figures are exaggerated. The real test comes once the AI-powered iOS 18.1 graduates from beta.
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iPhone 16: Slow startup. Look for iOS 18.1 to help it pick up the pace.

The launch of the iPhone 16 itself was met with shrugs. Some Wall Street pundits are unimpressed by phone debt. UBS analyst David Vogt recently pointed out that wait times for the latest generation device (the Pro line) are shorter than the previous two versions. While some may be worried about the iPhone 16’s first week on the market, others, like Wedbush Securities’ Dan Ives, aren’t ready to stop pounding the table.

Ives sees iPhone 16 sales as an “optimistic start” for the stock. This is quite a contrarian interpretation from the longtime Apple bull. In particular, Ives, who has a $300 price target on AAPL stock, believes the device will sell in the “high single digits” or even “probably double digits” in the December quarter.

I think Ives is right on the money. Investors should wait until iOS 18.1 is finally released and customers can try out the new software in stores. It looks like the big update could hit the US in late October, possibly a week before Halloween. The rest of the world has to wait a few more weeks.

I think Apple should have delayed the release of the iPhone by two months or more so that they could have Apple Intelligence ready out of the box.

There’s no reason to rush into an update, at least until Apple Intelligence evaluates.

Sure, many eager Apple fans lined up on day one to get their hands on the latest iPhone. That said, it’s hard not to imagine many other users patiently waiting for the big software update so they can try it out before shelling out $1,399 or more on a new device.

Indeed, paying a large sum upfront for a main attraction that is not yet here might not sit well with some. And it’s very hard to blame consumers waiting for software to catch up with hardware. The real test for Apple, I think, will be how device sales fare once iOS 18.1 is released.

Aside from a new camera (and button), the new iPhone 16 isn’t all that stunning for a hardware upgrade. However, if you’re sticking with a device that won’t support Apple Intelligence (anything older than last year’s iPhone 15), it makes sense to go for the 16 or even last year’s 15 if you want to save some dough while still getting a seat at the Apple AI debut.

Forget the first week of iPhone 16 sales. The last quarter will tell if there will be a supercycle

For now, Apple Intelligence is in beta, and the full intelligence of the updated Siri won’t be fully understood until iOS 18.1 is here. Indeed, the 18.1 update is certainly the biggest and deepest in iPhone history.

Adding ChatGPT to Apple’s ecosystem would certainly help boost sales, given the profound rise that the large language model (LLM) has enjoyed since it single-handedly sparked the AI ​​frenzy. However, it’s what Apple adds on top of ChatGPT (the personalized experience) that could dictate whether the “upgrade supercycle” we’ve all heard about materializes.

While AI is on every AAPL shareholder’s mind these days, I still think the skeptics will be proven wrong to push the supercycle into next year. I think the supercycle starts once iOS 18.1 lands.

Currently, iOS 18, which lacks Apple Intelligence, is already a solid update, even without the boldest and brightest AI features. If Apple Intelligence is the breakthrough update AI enthusiasts have been waiting for, Apple users and investors could be in for a real treat before the end of the year.

However, it remains to be seen whether such a supercycle entices Warren Buffett to buy back some of the shares he sold in the first quarter.

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