Apple Signal of AI Intent Unleashes $112 Billion Stock Surge

(Bloomberg) — The stock market has punished Apple Inc. this year for failing to offer a vision of where its future growth will come from. The shares caught a bid Thursday after the tech giant took a step toward providing an answer.

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Apple’s decision to overhaul its Mac computer line to focus on artificial intelligence, as reported by Bloomberg, struck a chord with investors, sending the stock up 4.3% and adding $112 billion in value in its best performance in nearly a year.

“Any announcement that pushes AI into consumer hardware could be very beneficial for Apple,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial. “However, the impact is yet to be determined.”

That will be key for assessing whether this latest rally can be sustained. Before Thursday’s announcement, the stock was down 15% from its record high set in December, wiping out more than $460 billion in market value. Trading close to its cheapest level in about a year, bargain-hunters clearly could justify taking a chance on Apple’s latest stab at AI relevance.

Sustaining this momentum, however, will depend on Apple’s ability to deliver on the promise of growth. For the Cupertino, California-based tech giant, that likely means getting AI into the iPhone.

The stock gained 0.5% on Friday.

Trading at Discount

“We think Apple will come back,” said Daniel Skelly, head of Morgan Stanley’s wealth management market research and strategy team. “It is hard to bet against some of the perennial winners forever.”

Apple has paid mightily for its recent stagnation. It’s one of the weakest performers among the so-called Magnificent Seven this year, trailing only Tesla Inc. That has made it relatively cheap.

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The stock trades at 26 times earnings, a discount to megacap peers such as Microsoft Corp. It’s less expensive than the Nasdaq 100 benchmark, which has an average multiple of 27, according to data compiled by Bloomberg.

The underperformance reflects the lack of a defined AI strategy and several quarters of weak trends, despite the…

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