TSLA - Apple's OpenAI Deal Requires In-House Innovation To Boost Growth

2024-06-21 16:01:03 ET

Summary

• Apple Inc.'s OpenAI deal has opened up the potential for Apple to innovate in AI applications, and hardware, and further develop its operating systems to boost product demand.
• Despite the potential in AI, management has not indicated enough critical innovation strategy to make results certain. Market saturation concerns and a lack of product innovation could reduce long-term growth.
• Apple is overvalued, considering my operations analysis. I expect its P/E ratio to contract, with a base-case price CAGR target of roughly 12% over the next decade.

I last covered Apple ( AAPL ) in December 2023; I put out a Hold rating at the time, and since then, the stock has gained roughly 12% in price. Since the initial thesis, I have done multiple rounds of in-depth research into Apple, and I consider the sentiment I presented in my first written analysis on Seeking Alpha of the company to be true. Yet, in the near term, it is worth investors considering that the company still has more room to expand, albeit at lower annual growth rates than previously, particularly for its revenue....

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