Does this big AI stock currently offer an interesting buying opportunity?

• Apple Intelligence promises to dramatically increase sales of products like the iPhone by integrating artificial intelligence into its devices.

• While analysts expect revenue growth to accelerate in the coming years, they caution that the current high valuation has already priced in much of that growth.

• Given potential risks such as regulation and dependence on the Google deal, it may be wise to wait for a better buying opportunity.

According to many analysts, Apple is currently on the cusp of a new technological revolution powered by artificial intelligence. Analysts agree that Apple is well positioned to win the AI ​​race. However, Craig Moffett of MoffettNathanson believes that many of the expected benefits of Apple’s AI growth have already been priced into the current valuation. This begs the question: How much room for further growth is there, and what are the risks?

Apple recently announced its AI strategy, called Apple Intelligence, at a time when there were concerns that the company was falling behind competitors like Google and Microsoft. The strategy is expected to ensure that sales of Apple products (especially the iPhone) increase significantly again. But what exactly does Apple Intelligence mean?

Apple Intelligence is a new strategy from Apple that uses artificial intelligence to make its products smarter and more personalized. Instead of focusing solely on improving Siri, its voice assistant, Apple Intelligence goes much further. The goal is to integrate AI into almost everything Apple makes so that its products can better respond to user needs and preferences.

The core of Apple Intelligence is the use of advanced technologies like machine learning and deep learning. These are forms of artificial intelligence that enable computers and devices to learn from the data they collect and adapt their behavior based on it. The more you use your device, the better it becomes at understanding what you want and need.

For example, your iPhone with Apple Intelligence can learn your daily habits, like which apps you use most often, what time you typically set your alarm, or which route you take to work. Based on this information, your iPhone can make suggestions to you, like suggesting a faster route if there’s traffic, or automatically opening the app you typically use at a certain time.

Apple Intelligence technology makes Apple devices and services not only easier to use, but also smarter. That means they get better and better at meeting your specific needs, without you having to do anything. The idea is that over time, your devices will get so good at understanding your habits and preferences that they can almost sense what you want to do before you do it.

Moffitt compares the potential impact of Apple’s new AI strategy to what happened when 5G was introduced in 2021 and 2022. When 5G first became available, it represented a quantum leap in the speed and reliability of mobile networks. This caused many people to want to replace their old iPhones with new 5G models, as they wanted to reap the benefits of this new technology. This led to a significant increase in iPhone sales.

Now, Moffitt suggests that the introduction of AI into Apple products could create a similar response. Just as 5G was a major reason people upgraded their devices back then, the integration of AI into Apple products could also create a new wave of demand. AI will increasingly be used in our daily lives, for example to provide better recommendations, to assist you personally, or to monitor your health. This will likely encourage people to buy new Apple products that have these features.

So it makes sense that many analysts are looking at Apple’s new strategy as a key driver of future growth, but MoffettNathanson analyst Craig Moffett cautions that many of these expectations have already been factored into the current valuation. That means there’s likely to be little upside for investors (at least in the short term).

Moffitt specifically points out that during the 5G upgrade cycle in 2021/2022, when Apple also made a major technological leap, the company’s valuation was much lower. This also left more room for higher returns. Interest rates were also lower at the time, meaning Apple would have needed less robust growth numbers to justify the same valuation as it does now. In the current scenario, with interest rates rising and an already high valuation, Apple would have to show much faster growth to maintain the same valuation. That seems highly unlikely, according to the analyst.

Apple probably won’t grow very fast, but it is expected to see a pickup in growth in the coming years. This year, sales are expected to grow just under 2%. In 2025, sales are expected to grow by about 7%, and more than 8% in 2026. This means analysts expect Apple’s growth to accelerate again, which is clearly good news for a company that has been dealing with stagnant sales for some time.

However, when we look at Apple’s valuation, the company still looks expensive at first glance. Apple’s earnings per share are expected to grow 11% in 2025 and 13% in 2026. These are good numbers, but the forward P/E ratio for 2025 is still well above 30 and for 2026 it will still be 27. This means that investors will still be paying more than 3 times next year’s earnings growth (PEG), which seems incredibly high.

In addition to the high valuation, Moffitt also sees other potential risks to Apple’s future growth. First, the rollout and success of Apple’s AI strategy could be affected by regulations and geopolitical tensions. This means that international laws or disputes could complicate the launch and use of this new AI. For example, if some governments impose strict regulations on the use of AI, it could slow down Apple’s growth. It’s important to remember that Apple, as one of the largest companies in the world, is almost constantly targeted by authorities.

Additionally, Apple makes billions of dollars (an estimated $20 billion) a year from Google by making its search engine the default on iPhones and other Apple devices. However, there is currently an antitrust case against Google, meaning the government is investigating whether Google is unfairly restricting competition. If this deal goes through and Apple loses that money, it could have a significant negative impact on Apple’s bottom line (especially in the short term). That money is almost entirely profit (since Apple has almost no costs).

While Apple is showing promising developments with its AI, the question remains whether these expectations are fully priced into the current valuation. Analysts are expecting revenue growth to accelerate, but with the high valuation and potential risks, it may be wise to remain cautious as an investor. For now, it may be worth waiting for a better buying opportunity.