Apple recently announced the launch of its first AI system, which pushes artificial intelligence to the stage of "personal intelligence" in one fell swoop. Apple's stock price performance was not shocking, but the A-share Apple industry chain ushered in a wave of price limits on June 12.
The 2024 Apple Worldwide Developers Conference (WWDC 2024) keynote ended successfully on June 11, with Apple announcing the launch of its first AI system, Apple Intelligence, which allows users to leverage OpenAI's ChatGPT when using Siri. Apple CEO Tim Cook said at the conference that Apple Intelligence strengthens privacy and personalization and "will go beyond artificial intelligence and into personal intelligence." ”
For Apple's AI layout, Shenzhen Oriental Harbor Chairman Dan Bin is very optimistic, and he reprinted 4 related comment articles on his personal social account in the last day, which are basically a good perspective to analyze Apple's developer conference.
However, there are also investors who are cautious about this. Pei Pei, the manager of the Internet monster thief group, told this magazine, "Generative AI tasks are still performed by ChatGPT in the cloud, and there is no computing power on Apple's side, only the functional integration of the software part, which has limited practical significance." Chen Da, a senior U.S. stock investor, also told this magazine, "Apple is now valued at 30 times, and for a long time from 2010 to 2018, Apple's price-earnings ratio has been less than 15 times, so the current valuation level is historically overvalued." ”
On the trading day when Apple announced the launch of its AI system, Apple's stock price fell by 1.91%. Different from Apple's stock price, the A-share market Apple industry chain after "time digestion", on June 12, the "fruit chain" leader Luxshare Precision, Lens Technology, Goertek and other collectives opened high, and Apple's concept of Jemet, Zhixin Precision, Haineng Industry, etc. have risen to the limit.
But Bin "applauds" Apple's cooperation with OpenAI
Within a day, Dan Bin reposted 4 articles about Apple's prospects on his personal social account. The topics are: "Apple AI subverts everything overnight!" Siri's epic evolution, ChatGPT-4o inside, Ultraman is here, Musk is angry", "After watching the "Apple AI Family Bucket", will you change the phone? "Heavy Hit from Apple" and "Apple's AI Epoch-making Debut: Integration of GPT-4o, Siri Full Evolution, Every System Can Be Used".
Based on the perspective of these four articles, the reasons for optimism are mainly reflected in three aspects: first, the software is more vital after being equipped with AI; Second, Apple's smart needs to be equipped with iPhone15 or above models, which has stimulated a wave of replacement; The third is that Apple's artificial intelligence is not intrusive and is a modest progress. For example, Peter Kafka, chief media and tech reporter at Business Insider, believes that these smart assistance scenarios do sound pretty good, especially the airport scene mentioned at the beginning, but not all of the features on display are game-changing. Moreover, Apple wants to be cautious on the AI path, trying to present an image of an AI that is both stunning and does not cause panic.
Regarding Apple's cooperation with OpenAI, Chen Da believes that it is a match made in heaven, "If Apple wants to make the iPhone a terminal device for artificial intelligence, it will definitely not be as effective as integrating ChatGPT from the outside to 1 if Apple wants to make the iPhone a terminal device for artificial intelligence." At the same time, ChatGPT itself faces the problem of monetization, it is a restricted for-profit entity rather than a non-profit organization, making money is still a very real need, and if it cannot be monetized commercially, it is difficult for generative AI to get long-term explosive development. One side needs a monetization platform, while the other side needs technical support. ”
Apple's cooperation with ChatGPT is a big shock to Google, and Pei Pei believes that Google can only stare dryly. In this battle, Microsoft has overtaken Google. As the world's best-selling mobile terminal, the iPhone is equipped with an AI system that will gain more users.
Apple's 30x valuation is at a high level
For Apple to launch a new technology, but the capital market reported the phenomenon of "foot voting". Chen Da believes that the reason is very simple, this is not a surprising information, the previous stock price has reflected expectations, when the good news comes to cash, the stock price adjustment is a natural thing.
Chen Da believes that the market expects Apple to definitely expand its AI business, and this expectation is included in the stock price. At present, Apple's price-to-earnings ratio of about 30 times is on the high side. Warren Buffett has been selling Apple stock for the past two quarters, and it's no secret that Buffett rarely sells shares when he believes the company's performance is stable and the stock price is undervalued, which is contrary to his value investing philosophy. In fact, from 2010 to 2018 at the latest, Apple's valuation hovered around 15 times for a long time; And with Warren Buffett building a position around 2016, Apple's valuation has gradually swelled to 30 times today. "I think there are two reasons for its high valuation: one is active buybacks; The second is the certainty of growth expectations. If the bar is lowered, the growth expectation will weaken, from 30 times to 20 or 15 times, which is also completely within a reasonable range. ”
William Kerwin, an equity analyst at Morningstar, noted, "We maintain our fair value estimate of $170 for Apple's stock, which is slightly overvalued." ”
Judging from the report written by Colvin, he is positive and optimistic about Apple's performance in fiscal year 2025 (calendar year 2024) and is confident in the iPhone upgrade cycle in fiscal year 2025. But he didn't raise Apple's valuation, which shows that Apple's optimistic performance has not digested the high valuation under his model's calculations.
Apple's end-side AI has no computing power
From the perspective of AI technology, Pei Pei posted that because generative AI tasks are performed by ChatGPT in the cloud, Apple has no computing power on the end side, and only the function integration of the software part.
Apple's WWDC pushes device-side AI, claiming that all AI functions will pass through the device side first, and those that cannot be implemented on the device side will be reported to the cloud for execution. The results were immediately announced by OpenAI: the vast majority of generative AI tasks, including writing and drawing, are performed in the cloud. This once again shows that there is still a long way to go in the decentralization of inference computing power.
There is a hypothesis circulating in the industry: if the price of the next-generation iPhone is raised by 10%-20% to obtain higher local inference ability, will most users accept it? Especially when 80%-90% of users have not yet developed the habit of using AI applications on a daily basis, why should the capital expenditure needs of data centers be passed on to consumers? Past experience in the consumer electronics market has proven time and time again that sacrificing cost performance for emerging features often outweighs the cost.
Apple's market capitalization may not surpass Nvidia's by 2025
On June 5, Nvidia's market capitalization climbed to $3.01 trillion, surpassing Apple for the first time and becoming the world's second-largest publicly traded company by market capitalization, after Microsoft.
However, then, Nvidia's market capitalization fell back to $2.97 trillion, and Apple's valuation rose again to $3.02 trillion. How will these two tech giants fare in 2025? Will Apple be able to maintain its position as the world's second-largest company by market capitalization?
In this regard, Wall Street analysts expect Apple's earnings to grow by 10% in fiscal year 2026 (calendar year 2025). If its forward P/E ratio remains at 27x, then its share price could rise to $215 by the end of September 2025. This will only boost its market capitalization to around $3.3 trillion.
Nvidia's adjusted earnings are expected to grow 33% in fiscal 2026. If it trades at an expected price-to-earnings ratio of 47x, its stock will be trading at around $170 by the end of 2025, with a market capitalization of nearly $4 trillion.
So, even if their valuations cool, Nvidia has a clear chance of surpassing Apple's market capitalization again next year. However, Apple has been recovering well from cyclical recessions, and if it demonstrates this ability again, its market value could soar.
Pei Pei mentioned that if there is any realistic concern about the $3 trillion Nvidia empire, it is that the inference computing power is decentralized to the end side, and the Nvidia inference card is overhead (at least half of the C-end is lost). Unlike training, inference scenarios have little dependence on CUDA (a computing platform launched by NVIDIA) and do not require NVLink (a bus and communication protocol developed and launched by NVIDIA), and the current simplified version (distilled) of large models can theoretically run on the device side. Apple's self-developed NPU (Neural Network Processing Unit) has the ability of end-to-end inference.
Nvidia itself is aware of this problem, so it has been pushing AI PCs based on RTX series graphics cards. However, the mobile terminal is another world entirely, and the development of NVIDIA's Tegra mobile solutions is not too good, while Apple's A-series and M-series chips have already fully proven their capabilities and formed a huge application ecosystem.
Nvidia's dominance in general-purpose computing is a trinity: the hardware itself, NVLink, and CUDA. However, in the era of device-side inference, NVLink is not necessary, the role of CUDA is greatly reduced or even unnecessary, and NVIDIA is limited to a pure hardware company. Consumer electronics companies like Apple, with end-user and consumer-grade solutions in their hands, could turn Nvidia's domination into a temporary one.
However, it is unlikely that these visions will be realized in the short term, or even in the long term. It is understood that the current cloud (data center) inference model is highly mature, and large model manufacturers are also more inclined to cloud inference (which helps manufacturers control their own data). In addition, NVIDIA's small and medium-sized cards have strong versatility and can be competent for a variety of different AI inference tasks, while device-side hardware may not have such versatility. Pei Pei pointed out, "In the long run, we don't know whether AI inference will be mainly performed in the cloud or locally; In the short term, it will definitely still be mainly executed in the cloud. So the Nvidia empire is still stable in the short term, but many people will think that the long-term shadow is enough to depress valuations. ”
The A-share apple industry chain has set off a tide of price limits
On June 12, leading companies such as Luxshare Precision, Lens Technology, and Goertek collectively opened high and returned to the mainstream of the market. In the Apple concept, individual stocks such as Jemet, Zhixin Precision, and Haineng Industry have a daily limit.
China Merchants Securities said that it is expected that iPhone, Apple smart wearables and XR hardware will usher in another big year of innovation from 2025 to 2026, and it is optimistic that Apple's end-side innovation in the AI era will promote the industrial chain to welcome a new round of development opportunities. Apple's AI is only supported from the iPhone15 Pro series, which is expected to promote the wave of old users to replace their phones, bringing upward elasticity to the performance and valuation of the domestic Apple chain.
Zhao Lin, an analyst at Huaxi Securities, is optimistic about Apple's latest progress in the field of artificial intelligence and suggests that investors pay attention to the latest application of AI in Apple's operating system. AI applications such as games and multimodal tracks are expected to be boosted by this, and the beneficiaries include Tencent Holdings, Meituan, Sanqi Mutual Entertainment, Mingchen Health, Perfect World, Kaiying Network, Dafeng Industrial, Fengyuzhu, Alto Electronics, etc.
In view of Apple's leading position in the industry and the possible wave of replacement, key companies in Apple's industry chain will also usher in new opportunities. Yang Zhong, chief analyst of the electronics industry of Huafu Securities Research Institute, believes that in the direction of AI application terminals, it is recommended to pay attention to Huaqin Technology, Furong Technology, Shenghong Technology, Feirongda, etc.
(The individual stocks mentioned in the article are only for example analysis and not recommendation)