2023 was dominated by the “Magnificent Seven,” which drove the bulk of the S&P 500’s total return last year. This year, it’s more like the Fab Five.
While Nvidia, Microsoft, Alphabet, Amazon, and Meta Platforms have all continued to outpace the market benchmark through the first half of the year, two members of the group have failed to keep pace. Apple (NASDAQ: AAPL) shares are up about 15% this year, trailing the S&P 500’s 16% year-to-date return. Shares were down more than 10% at one point this year. Tesla (NASDAQ: TSLA) stock is still down about 1% for the year despite a recent surge in the share price.
Should investors expect these two market leaders to return to their 2023 form or continue trailing the market?
Image source: Getty Images.
Apple’s Embrace of AI Trend
While artificial intelligence drove the growth of most of the Magnificent Seven last year, Apple wasn’t a big player in the space until recently. It announced its new “Apple Intelligence” features at its annual Worldwide Developers Conference (WWDC) in early June. The new features include writing assistance, AI image generation and editing, and a much more advanced Siri. Apple also announced a system for integrating third-party large language models and applications like OpenAI’s ChatGPT into iOS.
Two potential catalysts from these new AI announcements include a potential increase in device upgrades in the near term and the groundwork for running AI applications on the iPhone in the long run. This move could usher in a slew of AI-powered apps and bolster demand for its Private Cloud Compute system. While Apple currently trades around 29.8 times forward earnings, the company’s strong cash flow and strategic investments in innovation positions it for growth.
After a slow start to 2024, Apple looks like a buy now.
Tesla’s Evolution Beyond Automobiles
Tesla investors have faced challenges with pricing pressure affecting sales and profitability. The company reported its lowest quarterly sales since 2022 in the first quarter, down 8.5% year over year. Despite this, Tesla showed improvement in the second quarter with better-than-expected sales figures.
Upcoming plans to introduce more affordable vehicles and the highly anticipated robotaxi event in August are critical for Tesla’s future trajectory. The event aims to showcase Tesla’s progress towards fully autonomous vehicles and a fleet of robotaxis, a vision that has the potential to reshape transport dynamics. However, with Tesla shares trading at around 93 times forward earnings, the stock’s valuation reflects significant expectations.
Investors are eagerly awaiting the outcome of Tesla’s strategic initiatives, with hopes pinned on transformative developments that could propel the stock forward. Despite the optimism, the current valuation of Tesla presents a high level of risk, making it a cautious pick for investors.
Is Apple Stock a Worthy Investment?
Before diving into Apple stock, let’s explore some critical insights:
Analyst Picks and Historical Returns
The Motley Fool Stock Advisor research team recently uncovered the 10 best stocks they believe could offer exceptional returns, with Apple not making the cut. However, past picks have proven immensely profitable. For instance, when Nvidia featured in a similar list on April 15, 2005, a $1,000 investment then would have ballooned to $771,034 following the recommendation*.
Stock Advisor doesn’t just promise but delivers. Their strategy aids investors in constructing a solid portfolio, offering regular analyst updates and unveiling two fresh stock recommendations monthly. Since 2002, Stock Advisor has surpassed the S&P 500 returns by more than quadruple*.
Revisiting such astonishing growth stories could leave any investor salivating with excitement. The vivid recollection of Nvidia’s meteoric rise serves as a potent reminder of the wealth-building potential lurking within carefully chosen equities.
Unlocking Real Growth Opportunities
As the stock market continues to surprise and reward bold investors, the opportunity to explore high-growth avenues cannot be overstated. Charting a path in line with expert recommendations carries the promise of accessing explosive opportunities that could redefine one’s financial future.
Investors pondering an Apple investment might be wise to leverage the insights offered by seasoned experts. Drawing a parallel with Nvidia’s historic surge, the potential for Apple to follow a similar trajectory becomes all the more conceivable.
Final Thoughts
As Stock Advisor boasts a track record of unearthing hidden gems and charting a course to financial prosperity, the allure of aligning with such seasoned guidance should not be underestimated. The prospects of reaping substantial rewards, akin to the Nvidia windfall, lie within grasp provided one heeds the wisdom offered by this trusted advisory service.
The journey to lucrative investments is fraught with risks, but with expert foresight and meticulous planning, the dream of witnessing one’s wealth swell exponentially can metamorphose into a tangible reality.
*Stock Advisor returns as of July 2, 2024