Apple, Inc. AAPL and Tesla have significantly diverged from the performance of the other “Magnificent Seven” tech stocks since the beginning of the year. On Monday, Apple’s stock fell an additional 2.84%, prompting analysts to weigh in on the reasons behind the decline.
Munster Remains Bullish: Deepwater Asset Management’s Managing Partner, Gene Munster, expressed optimism despite the short-term dip.
“While $AAPL investors are focused on the trees, I believe the forest will prevail,” Deepwater Asset Management’s Managing Partner Gene Munster said in a post on X. “If humanity needs devices in the future, Apple will continue to flourish long-term.”
Case For Apple’s Bullish Potential: In a separate CNBC interview, Munster presented his arguments for a bullish case for Apple. He highlighted Apple’s impressive user base, citing 2.2 billion active devices and a potential 1.4 billion monthly active users (though the latter figure is not officially disclosed by Apple).
Munster emphasized the company’s diverse range of services, spanning music, iCloud storage, and Apple TV, with an average monthly cost of $9 per user. He believes that offering personalized AI services to just 20% of the installed base at $10 per month could significantly boost operating earnings by over 15%.
This potential increase in operating earnings is crucial for Apple as it enters a seasonally slow period, according to Munster. He predicts a 2% average decline in business activity for each quarter following the March quarter.
“And so anything in the growth direction is going to be viewed as positive,” he added.
See Also: Everything You Need To Know About Apple Stock
Apple’s Baby Steps Into AI: Elaborating on the potential for personalized AI offerings from Apple, Munster envisions features like chatbots tailored to individual users, capable of tasks like paying bills or scheduling social events.
“There’s [an] infinite number of things that you can do with a personalized AI,” he said.
Apple will have an edge due to its unique position with respect to privacy and security, the fund manager said. “A unique position in the sense that consumers have to give their data to have their this precise AI be active and I think people will take that.”
Munster weighed in on the near-term concerns surrounding Apple but shrugged those off. “And the key question that I have when I think even beyond AI is a very simple question — are we going to use devices in the future? And if the answer is yes to that, Apple is the only company that brings together hardware, and software services. Soon, add AI to that,” he said.
“It seamlessly brings hardware together across devices. Nobody does that. And so I understand this is a dark chapter for Apple. But I believe that once they inject AI into that ecosystem of hardware, software services bring that together, I think that this tide will turn.”
Apple To Be Toppled By Nvidia? Taiwan-based TFI Securities analyst Ming-Chi Kuo on Monday said the previous iPhone shipment consensus estimate of 220 million to 225 million for 2024 has now been revised down. The estimate was inching toward Kuo’s previous estimate of 200 million units, he noted.
“If Apple fails to launch generative AI services this year that are better than market expectations, Nvidia’s market value will most likely surpass Apple,” he said.
Munster said on Monday he expects Apple to release its first foundation AI model this June at its annual Worldwide Developers’ Conference. “By now it’s become clear that this June we will see their first foundation model, something that will compete with GPT, Gemini, xAI, Anthropic,” he said.
Last week, Apple reportedly pulled the plug on its self-driving car project to focus on its generative AI offering.
In premarket trading on Wednesday, Apple rose 0.40% to $170.80, according to Benzinga Pro data.
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