Apple's stock price decline, Buffett's reduction in holdings raises doubts, can AI and new technologies turn the tide?
Apple's stock price has fallen for the fifth consecutive day, dropping by nearly 12%, while the overall market continues to rise. Buffett's reduction of Apple shares has raised doubts. Analysts believe that Apple is facing challenges such as regulatory pressure, weak revenue, and a lack of new products. Wall Street is concerned that Buffett may continue to reduce his holdings of Apple stock. Investors are advised to sell some of their Apple shares and focus on other hardware stocks. Apple is about to release new AI features at the WWDC developer conference, hoping to alleviate the current situation.
Zhitong App has learned that Apple's stock price has been falling for the fifth consecutive day, dropping nearly 12% since the beginning of 2024. Meanwhile, the broader market continues to rise. Rosenblatt Securities analyst Barton Crockett has given Apple a "neutral" rating with a target price of $189. He mentioned that Apple is at a crossroads, facing various challenges such as regulatory pressure, weak revenue trends, and a lack of mainstream new products.
At the same time, Mizuho analyst Jordan Klein pointed out that if Wall Street discovers that Warren Buffett's Berkshire Hathaway (BRK.A.US) is "reducing its massive stake in Apple," the situation could worsen. Despite Buffett having reduced his stake by about 1% in the last quarter, Klein suspects that more selling may be on the horizon.
Buffett is one of Apple's largest shareholders, and according to Klein, he has "made a substantial profit on his holdings." Considering his stake of approximately 905 million shares, coupled with recent unfavorable comments on the stock, Klein stated that he "would not be surprised" if Buffett is selling shares.
In response, Klein suggested that Apple investors start selling some of their shares and focus on other hardware stocks such as Dell Technologies (DELL.US), Western Digital (WDC.US), and Silicon Motion Technology (SIMO.US).
Apple to Launch New AI Features Drawing Market Attention
Klein expects that until Apple previews its plans for generative artificial intelligence at the June WWDC developer conference, Apple may continue to lag behind.
Meanwhile, Rosenblatt's Crockett is also looking forward to the conference. In a report to clients, he stated, "If Apple can introduce inspiring new AI features, this may help alleviate the current predicament."
Apple CEO Tim Cook has hinted at an upcoming announcement regarding generative artificial intelligence, which many believe will be made at WWDC, but Apple's specific AI usage plans are currently unclear.
Crockett pointed out that on one hand, the company's development in "large language models" or generative applications is not significant, and its R&D spending is lower than its peers.
He noted that Meta Platforms (META.US), Facebook's parent company, spent $38 billion on R&D last year, with expected capital expenditures this year ranging from $30 billion to $37 billion. Alphabet Inc. (GOOGL.US), Google's parent company, had $45 billion in R&D spending in 2023, with this year's capital expenditures expected to be "significantly higher" than last year's $32 billion.
In contrast, Apple spent $30 billion on R&D in the previous fiscal year, with capital expenditures of $11 billion. Crocker said, "The proportion of R&D and capital expenditure on AI may be much higher for Alphabet and Meta than for Apple."
Given the relative expenditure range, he doubts whether Apple can compete with companies like Alphabet and Microsoft (MSFT.US) in the generative AI subscription sales.
He wrote, "We doubt that Apple will promote its AI processing capabilities on Microsoft and other companies' applications, thereby making the value of AI to Apple mainly reflected in driving sales of iPhone and Mac." A fitting example is: Apple touted its new MacBook Air series as "the best AI consumer notebook in the world" on Monday.