Should You Buy Apple Stock Before June 10? | The Motley Fool (2024)

Artificial intelligence (AI) has been all the rage since early last year, with many of the biggest companies in technology staking their claim. For example, a number of the so-called "Magnificent Seven" stocks have been extremely forthcoming about their plans to profit from the windfall resulting from the rapid adoption of AI, and several of these same stocks have generated market-beating returns this year.

One member of the collective that's been curiously left out of the conversation is Apple (AAPL -0.49%). The iPhone maker has historically kept its plans and product upgrades close to the vest, including its intentions regarding the deployment of generative AI. This, combined with lackluster iPhone sales, has plagued Apple's share price, which is essentially flat in 2024.

Apple's Worldwide Developer Conference (WWDC) is scheduled to kick off on June 10, and speculation is rampant that the company will finally lay out its generative AI strategy. That, in turn, could light a fire under Apple's stagnant share price and set the stage for future gains.

With the stage set, should investors buy Apple stock before its highly anticipated event? Let's examine the available evidence.

Has the time come?

Apple hasn't had much to say about the topic of generative AI, at least until recently. After remaining largely silent on the topic for nearly a year, CEO Tim Cook has finally begun to shed some light on Apple's aspirations. Earlier this year, Cook said of the company's AI plans, "We continue to spend a tremendous amount of time and effort, and we're excited to share the details of our ongoing work in that space later this year." When pressed for additional details, Cook responded, "Our M.O. [modus operandi], if you will, has always been to do work and then talk about work."

Cook opened up a little more during Apple's second-quarter earnings call. "We continue to feel very bullish about our opportunity in generative AI. We are making significant investments, and we're looking forward to sharing some very exciting things with our customers soon." Cook went on to highlight the company's "seamless" integration of hardware, software, services, and processors while never taking its eye off user privacy.

Historically speaking, Apple has announced some of its most groundbreaking product releases and updates during WWDC, so it stands to reason the company would reveal its generative AI objectives at the event.

A "once in a decade" event?

Wall Street is buzzing about Apple's annual conference, which would mark the perfect venue to introduce developers to the company's AI functionality. This would give them time to create signature generative AI-powered apps before the release of the next iPhone.

Bank of America analyst Wamsi Mohan suggests that the release of AI-enabled phones could spark a multiyear upgrade cycle that's a "once in a decade type of event." He goes on to suggest that with more than 2.2 billion active devices, Apple could drive generative AI into the mainstream. These AI-fueled devices could vastly improve photography, health monitoring, security, and even battery life.

Wedbush analyst Dan Ives is even more bullish, raising his price target on Apple stock to $275 while maintaining an outperform (buy) rating on the shares. That represents 45% upside compared to Tuesday's closing price. Ives posits that an "AI-driven iPhone 16 supercycle [is] now on the horizon." The analyst goes on to say that generative AI will represent "ample monetization opportunities" for Cook and company. Ives also revealed that recent channel checks suggest the beginning of a long-awaited rebound in iPhone sales in China, one of Apple's biggest markets. Tepid sales in the region have weighed on the stock in recent quarters.

It's also worth noting that of the 38 analysts who offered an opinion on Apple stock in May, 84% rated it a buy or strong buy, and not a single one recommended selling. Since Wall Street rarely agrees on anything, it's noteworthy when there's such a solid consensus.

Should you buy Apple stock now or wait until after WWDC?

For day traders looking to make a quick buck, hopping into and out of stocks around major events in order to catch the rally before selling, Apple might not be the stock for you. Truth be told, we don't know exactly what Apple will announce at WWDC. Furthermore, even if the company does jump feet-first into generative AI, that doesn't mean its efforts will yield immediate results.

However, for investors with an outlook of years rather than weeks or months, there's plenty to like about Apple. The company has a long track record of defying detractors while continuing to build an empire. Market historians will note that Apple has rarely been first to market with anything but frequently releases industry-leading products that stand the test of time. At the same time, services is Apple's fastest-growing segment, driven by its 2.2 billion active devices.

If I were to hazard a guess, I'm inclined to believe that Apple stock will perform much better in the second half of 2024 than the first half and will be a market-beating investment over the next five years. That said, if the company's WWDC announcement disappoints, it could be a rough ride over the short term.

Finally, there's the matter of Apple's valuation. At 29 times trailing-12-month earnings, the stock is only slightly more expensive than the multiple of 27 for the S&P 500. Furthermore, over the past five years, Apple stock has soared 327% (as of this writing), more than three times the 88% gains produced by the broad index. This helps illustrate why Apple is deserving of a premium.

For investors looking beyond June, I believe Apple's long track record of success speaks volumes about the company and its future prospects. That's why investors should simply buy Apple for the long runway ahead.