apple (NASDAQ:AAPL) Apple is the world’s most valuable company right now with a market cap of about $3.3 trillion, but the tech giant’s stock hasn’t performed as well as some other big tech names so far this year.
apple, along with Amazon, Nvidia, Microsoft, alphabet, Meta platformsand Teslaare the seven largest technology-focused companies that have played a pivotal role in driving the stock market rally over the past year and a half. They are collectively known as theThe Great Seven“It is worth noting that some of them, such as Nvidia, Meta, and Alphabet, achieved stronger gains than the market in 2024.
However, it wouldn’t be surprising to see Apple shares rally in the closing stages of 2024 and eventually reach a market cap milestone of $4 trillion, which is 21% away from its current valuation.
Artificial intelligence is likely to boost Apple’s sales
Apple has yet to launch an AI-powered smartphone compared to rivals like Samsung and other Chinese OEMs that have already jumped on the bandwagon. However, that’s likely to change next month when the company launches its next-generation iPhones, which are set to support the company’s suite of generative AI features known as Apple Intelligence.
The tech giant presented Apple Intelligence in June of this year, noting that this platform will be “deeply integrated into iOS 18, iPadOS 18, and macOS Sequoia.” It has a wide range of generative AI features. This could trigger a new upgrade cycle, encouraging users on older devices to upgrade to the latest iPhones.
JPMorgan Analyst Samik Chatterjee believes the next iPhone will start a new upgrade cycle that will continue beyond Apple’s 2025 iPhone generation. More specifically, the analyst estimates that Apple could see a 10% increase in iPhone unit sales in fiscal 2025 to 244 million units. Apple’s fiscal 2025 will start late next month and coincide with the launch of AI-powered iPhones.
JPMorgan expects iPhone sales to rise to 268 million units in fiscal 2026, suggesting the upgrade cycle will intensify as the company refreshes its lineup next year. The good news for Apple investors is that the iPhone isn’t the only device getting a dose of AI. Apple’s smarts will be available on MacBooks, too.
These markets could open up another strong growth opportunity for Apple. For example, the AI-powered PC market is expected to grow from annual shipments of 48 million units in 2024 to 205 million units in 2028. Adding Apple Intelligence to the company’s Mac operating system puts it in a good position to capitalize on this secular growth opportunity in the long term.
All of this suggests that Apple may be at the beginning of a new growth curve that could eventually help the stock regain its strength and rise in the long run. However, a closer look at the latest sales figures from Apple’s key chip manufacturing partner suggests that it won’t be long before the tech giant hits a market cap of $4 trillion.
One of the major signs that Apple is preparing to launch an iPhone powered by artificial intelligence
The processors that power Apple’s iPhones are made by a giant alloy maker. Semiconductor manufacturing in TaiwanTSMC is known by its common name. Apple is said to be TSMC’s largest customer, accounting for 25% of its total sales last year. The tech giant is said to be one of the companies that has fully booked the Taiwanese company’s supply of 3-nanometer (nm) chips.
With Apple’s iPhone 16 models set to use 3nm processors, it’s no surprise to see rumors that the company has been ordering more chips from TSMC. Reports suggest that Apple’s iPhone 16 production in 2024 could be 10% higher than the number of iPhone 15 models it produced in 2023. That’s probably why TSMC recently reported a staggering 45% year-over-year jump in its July revenue.
For comparison, TSMC’s revenue in July was down about 5% year-over-year in 2023. Of course, Apple probably wasn’t the only customer driving TSMC’s revenue growth last month. However, since the iPhone maker is TSMC’s largest customer, there’s a good chance it’s ramping up its chip orders in an effort to aggressively roll out its next-generation smartphone lineup.
That would be a smart move, as shipments of AI-powered smartphones are expected to grow 364% this year to 234 million units. And since Apple’s AI-powered iPhones are due to hit the market in time for the holiday season, they could see stronger-than-expected demand. As a result, Apple’s growth in the last six months of 2024 could beat Wall Street expectations.
According to the consensus of 49 analysts covering Apple, the stock has a median 12-month price target of $250, representing a 16% increase from current levels. However, Apple’s AI-driven growth acceleration could help the stock post much stronger gains in 2024 itself and get closer to the Street’s high price target of $300, which would be more than enough to make it the world’s first $4 trillion company by the end of the year.
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Susan Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, the former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former Facebook chief market development officer and spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool subsidiary. Harash Chauhan The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, JPMorgan Chase, Meta Platforms, Microsoft, Nvidia, Taiwan Semiconductor Manufacturing, and Tesla. The Motley Fool recommends the following options: Buy $395 January 2026 calls on Microsoft and sell $405 January 2026 calls on Microsoft. The Motley Fool has Disclosure Policy.
Prediction: This ‘Magnificent Seven’ Stock Could Be the World’s First $4 Trillion Company in 2024 Originally posted by The Motley Fool
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