Should you buy Apple stock before June 10?

Actions of Apple (NASDAQ:AAPL) have lagged behind the return of the market as a whole over the past year. One of the issues weighing on the stock is the perception that other tech companies like Alphabet And Microsoft are ahead of the iPhone maker in terms of artificial intelligence (AI).

But Apple should finally unveil its AI plans at the Worldwide Developers Conference (WWDC) on June 10. Investors already appear to be pricing in positive news about the company’s AI initiatives, with shares up 16% in the last month alone. Let’s look at how AI-enabled iPhones could benefit Apple, then think about what that means for the stock.

Apple’s AI opportunity

Apple is very aware of the huge opportunity to sell more AI-enabled devices, and is investing a lot of money into it. The company has invested more than $100 billion in research and development over the past five years, and it reportedly spends more than $1 billion per year specifically on AI research.

But Apple doesn’t waste money. Management’s commentary on the latest earnings conference call suggests that it is investing very deliberately in this technology.

During the company’s second-quarter earnings call, CFO Luca Maestri said: “We have a bit of a hybrid model in which we make part of the investments ourselves. In other cases, we let’s share them with our suppliers and partners.” This approach will allow Apple to provide new AI services to its customers without having to incur the cost of building a multi-billion dollar AI infrastructure.

Apple plans to bring some AI features from third parties like Google to the iPhone. It was reportedly in discussions with Alphabet to bring generative AI to iPhones. Licensing certain technologies from Google, which has already built a sophisticated AI model with Gemini, would be a cost-effective strategy for adding specific software tools into iOS.

Where it makes sense for Apple to invest internally is in hardware. Apple is reportedly building its own chips that will perform basic AI tasks locally on the iPhone without sending user data to cloud servers.

Unlike Microsoft and Google, which offer some AI services to their customers through subscription plans to directly monetize the technology, Apple can use AI to increase sales of high-end iPhone models.

The next version of iOS is expected to feature several AI improvements. That would make iOS 18 the biggest update in years, but some of these features will likely require the use of Apple’s most advanced mobile chip. This would encourage customers who are still using older iPhones to upgrade to the current model, increasing Apple’s revenue and margins.

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Is the stock a buy?

The Wall Street consensus expects Apple’s earnings to reach $8.01 per share in fiscal 2026. Assuming Apple’s forward price-to-earnings ratio remains the same, investors only see a increase of only 30% based on these estimates.

However, these projections may underestimate the impact AI will have on iPhone demand. Investors are essentially getting fairly valued stocks with the potential to surprise on the upside.

Overall, given the stock’s recent underperformance, now may be a good time to buy shares ahead of Apple’s upcoming AI launch. Investors should remember that diversification is essential to managing risk in their portfolios. While Apple’s AI potential is promising, it’s wise to balance investments across different industries and companies to mitigate any potential slowdown. And you should also consider many potential investment ideas in the AI ​​market.

Always consider your long-term financial goals and risk tolerance before making investment decisions.

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Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. John Ballard has no position in any of the stocks mentioned. The Motley Fool holds positions and recommends Alphabet, Apple and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

Should you buy Apple stock before June 10? was originally published by The Motley Fool