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IN BRIEF
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For several years, Apple’s shares have attracted the interest of investors, and the question of their valuation remains at the heart of financial discussions. While some analysts believe the tech giant is undervalued relative to its future growth potential, others point to factors that could weigh on its price. In this context, exchange-traded funds (ETFs) are emerging as a key tool capable of redefining the market’s perception of Apple shares. This article explores what could indicate these stocks are ultimately undervalued and how ETFs could influence this dynamic.
THE Apple shares have experienced notable growth this year, with an increase of 22.4% since the start of the year and 26.1% over the last twelve months. However, despite this increase, some analysts believe the shares are still undervalued due to their low presence in institutional portfolios. Let’s take a closer look at whether Apple’s actions deserve greater attention.
Apple’s Artificial Intelligence initiative
Apple recently launched a new AI feature, called « Apple Intelligence », which will be included in iOS 18 in October. This initiative aims to improve Siri and automate various tasks such as generating emails, sorting images and integrating advanced features like automated photo cleaning and ChatGPT. The hedge fund Third Point, backed by Daniel Loeb, bet big on this innovation, which boosted the value of Apple shares.
Apple’s private cloud services
Apple also introduced a new cloud service, called Private Cloud Compute, focused on user privacy. Using the capabilities of Apple Silicon, this service ensures that user requests are processed on-device even when possible, thereby minimizing data privacy risks.
Recent financial performance
Apple posted strong third-quarter financial results, beating earnings per share and revenue estimates. Although iPhone sales remain crucial, the iPad segment has also shown significant growth, revealing opportunities for market expansion. However, the company encountered difficulties in China which affected regional sales.
Broker recommendations
Currently, Apple enjoys an average recommendation of 1.73 (on a scale of 1 to 5, 1 being strong buy, 5 being strong sell), based on reviews from 31 brokerage firms. This figure increased slightly from the previous month, where the average recommendation was 1.62 with 30 recommendations.
Why could ETFs be a game changer?
ETFs (Exchange-Traded Funds) provide an interesting solution for tracking Apple’s potential while minimizing company-specific risks. ETFs allow you to diversify investments and limit the impact of sudden fluctuations. ETFs with high exposure to technology, such as Technology Select Sector SPDR Fund (XLK) oriShares Global Tech ETF (IXN), include significant shares of Apple in their portfolio.
| Criteria | Apple | Technology ETF |
| Exposure to specific risks | High | Reduced |
| Diversification | Weak | High |
| AI tracking | Direct | Indirect |
| Volatility | High | Moderate |
| Growth potential | Pupil | Variable |
- Risk Exposure : Reduced with ETFs;
- Diversification : Strong in technology ETFs;
- Growth potential : Apple helped by AI initiatives including the integration of ChatGPT;
- Data Privacy : Augmented with Apple’s Private Cloud Compute service;
FAQs
Is Apple stock undervalued? Despite strong performance this year, some analysts believe Apple shares are undervalued due to their low presence in institutional portfolios and Berkshire Hathaway’s reduced stake.
How can ETFs help invest in Apple? ETFs offer a diversified approach that reduces company-specific risks, while still allowing you to benefit from Apple’s growth. Tech ETFs like XLK and IXN include significant shares of Apple and spread risk across multiple companies in the industry.
What are Apple’s recent AI initiatives? Apple launched the « Apple Intelligence » feature in iOS 18, which improves Siri, automates email management and integrates advanced technologies like ChatGPT. This move could strengthen Apple’s revenue growth.
What new services is Apple offering for data privacy? Apple has unveiled a private cloud service called Private Cloud Compute, using Apple’s Silikon to ensure user data is processed locally where possible, minimizing privacy risks.
What are Apple’s current challenges in the Chinese market? Apple has encountered difficulties in China, affecting its regional sales. However, other segments, such as the iPad, show significant growth opportunities.