Apple’s stock (AAPL.O) surged by 7% on Friday following the company’s announcement of a record buyback plan and optimistic sales forecasts, reigniting investor interest. The bullish outlook for fiscal third-quarter sales, which exceeded Wall Street’s expectations, instilled confidence among investors who had previously been cautious due to concerns about weakening demand and increased competition in China.
The approval of an additional $110 billion in share repurchases marked the largest buyback authorization ever by a U.S. company, according to EPFR analyst Winston Chua. This news boosted Apple’s market capitalization to $2.86 billion, positioning it just behind Microsoft (MSFT.O) at $3 trillion.
Friday’s surge in stock value added nearly $200 billion to Apple’s market worth, indicating strong investor demand. With the current stock price, executing Apple’s full buyback authorization would involve repurchasing nearly 4% of the company’s shares. The company’s optimistic outlook reflects confidence in upcoming product updates, starting with an iPad event on May 7, aimed at boosting demand in its hardware business following a period of slow growth.
Analysts praised CEO Tim Cook’s strategic decisions, with eToro analyst Josh Gilbert commending Cook’s ability to reassure investors about Apple’s growth potential. The significant buyback program aligns Apple with other tech giants and underscores the maturity of the industry, according to financial analysis head Danni Hewson at AJ Bell.
Unlike some rivals like Alphabet and Microsoft, Apple has avoided significant costs in generative AI investments, impacting its share performance. However, CEO Cook hinted at exciting developments in AI integration at the upcoming annual developer conference, generating anticipation among analysts.
Bernstein analysts anticipate a strong iPhone 16 cycle driven by AI functionality and extended replacement cycles. This positive outlook led at least 13 analysts to raise their target price on Apple, with the median view reaching $200, indicating a 15% increase from the stock’s last closing price.
Despite the recent surge in stock value, Apple’s valuation remains relatively conservative, trading at 25 times its 12-month forward earnings estimates compared to 30.5 for Microsoft. Apple aims to reclaim its position as the world’s most valuable firm, leveraging its AI initiatives and anticipated product launches.
