Apple (NASDAQ:AAPL) shocked Wall Street when it announced its massive $110 billion buyback plan (the largest of all time) alongside a generous dividend increase and a side of some better-than-expected quarterly results. Shares shot around 6% higher after the big release but pared around 1% in the following week after it was discovered Warren Buffett’s Berkshire Hathaway (NYSE:BRK.B) had sold around 100 million worth of shares, which worked out to 13% of his stake.
Then, on Tuesday, Apple hosted its big iPad event, which featured the all-new M4 chip. Indeed, it’s been a rather eventful past week. But have the circumstances changed for investors looking to bet on the company’s take on the future of generative artificial intelligence (AI)?
In light of the Berkshire sale, the iPad event, the massive buyback, the decent quarter, and more commentary on generative AI features ahead, I’d be inclined to be a net buyer and am staying bullish on AAPL stock, even if Buffett and company plan to lighten up further over the coming months.
A Historic Buyback at an Opportunistic Time
Apple’s massive buyback may give some 110 billion more reasons to be a raging bull on AAPL stock. But with Berkshire Hathaway trimming its massive stake, investors may be quite conflicted about what to do with the Cupertino-based tech titan. Though Berkshire’s share sale may be a concern to some, I find it to be a neutral event that was nothing personal.
Apple CEO Tim Cook was in the audience at the 2024 shareholder meeting and seemed as supportive as ever in the Oracle of Omaha. When asked at Berkshire’s 2024 shareholder meeting, Buffett hinted at taxes as a reason it decided to axe its stake.
Though Buffett has a nose for value, it’s clear AAPL stock is in a bit of a weird spot right now. There is a relative lack of AI firepower (at least that the public is aware of) and a multiple—28.4 times trailing price-to-earnings (P/E) at writing—that seems to be leaning a bit on AI rumors.
Based on the multiple alone, you could say Apple stock is far pricier than it was when Berkshire first picked up shares back in 2016. Back then, AAPL stock sported a P/E ratio in the teens. That said, with a June developer event rumored to be packed with AI, perhaps AAPL stock is still cheap relative to the magnitude of profound innovation on the horizon.
Of course, there’s been no shortage of reports and rumors coming from the iPhone maker. The most…
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