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Apple is JPMorgan's best pick in Edge AI

Published 06/24/2024, 07:54 PM
© Reuters

JPMorgan analysts see Apple (NASDAQ:AAPL) as well-positioned in the Edge AI hardware market, highlighting its large iPhone user base and potential for higher profits compared to competitors.

In its note, the investment bank emphasizes a shift towards "Profit TAM [Total Addressable Market]" over "Revenue TAM," suggesting a focus on Apple's ability to translate sales into substantial profits.

"We still see upside opportunity from a less macro sensitive customer demographic in the iPhone installed base," the analysts say.

Compared to other phone makers, Apple is seen as better placed to capture higher profits during an upgrade cycle due to its loyal customer base and premium pricing strategy.

While investor optimism is high for Edge AI beneficiaries recovering from recent market slowdowns, JPMorgan cautions against getting ahead of reality. "Shares of Edge AI companies like Teradyne and Qualcomm trade at relatively expensive multiples," they note.

In contrast, Apple's stock price is viewed as more attractive. "Apple [is] still only trading at the high-end of its historical range," the report states. This, combined with the potential for a substantial upgrade cycle driven by AI features, makes Apple the "best pick" among Edge AI-related companies, according to JPMorgan.

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