Apple shares rise as record buybacks and optimistic forecasts attract investors | Technology news

Apple shares rose 7% on Friday, as the iPhone maker’s record share buyback plan and promise of sales growth attracted investors who had avoided the stock over concerns about weak demand and rising prices. competition in China.

The company late Thursday forecast fiscal third-quarter sales that exceeded Wall Street’s modest expectations.

It also approved an additional $110 billion in share buybacks, the largest buyback authorization ever granted by a U.S. company, according to EPFR analyst Winston Chua.

Friday’s stock gain added nearly $200 billion to Apple’s market capitalization, raising it to $2.86 billion, second only to Microsoft, which is worth $3 trillion.

At Friday’s stock price, executing Apple’s full buyback authorization would be equivalent to buying back almost 4% of the company’s shares.

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Apple’s forecast showed it is confident that product updates, starting with an iPad event on May 7, will boost demand in its hardware business after months of slow growth that made some investors doubt its status as a stock. essential.

“Many investors had begun to wonder if Apple still has what it takes to achieve the maximum growth they’ve become accustomed to over the years, but CEO Tim Cook turned on his charm and offered relief to investors,” said Josh Gilbert. , investment analyst. eToro platform.

The buyback aligned Apple with other American tech giants that have showered investors with cash in recent earnings seasons to calm concerns about rising investments in generative AI. Some analysts also saw it as a sign that the industry was maturing.

“Growth stocks must demonstrate that they continue to grow at a rate that satisfies their shareholders. Once that growth slows, and Apple is a prime example, then buybacks or dividends may persuade investors to keep the faith,” said Danni Hewson, head of financial analysis at AJ Bell.

Unlike Alphabet and Microsoft, Apple has not seen a cost increase because it has not made large investments in artificial intelligence. But the slow rollout of AI services has been punished by investors, partly driving the 10% drop in its share price this year.

CEO Cook said Apple plans to share “some very interesting things,” stoking expectations among several analysts that Apple would announce AI integrations at its upcoming annual developer conference, which is expected to be the largest in history.

Bernstein analysts said they expected “a strong iPhone 16 cycle driven by AI functionality as well as long replacement cycles.”

At least 13 analysts raised their Apple price target, raising the average view to $200, up 15% from the stock’s last closing price.

Apple stock recently traded at 25 times its 12-month earnings estimates, compared with 30.5 for Microsoft. The Windows maker took Apple’s crown as the world’s most valuable company earlier this year, thanks to its efforts in artificial intelligence.