Apple shares jump as record buyback and upbeat forecast lure investors

Apple’s shares (AAPL.O) surged 7% on Friday following the tech giant’s announcement of a record stock buyback plan and optimistic sales growth forecasts, which reignited investor interest. The company’s bullish outlook for fiscal third-quarter sales, surpassing Wall Street’s expectations, fueled confidence among investors who had previously been cautious due to concerns about weakening demand and heightened competition in China.

In a move signaling strong financial confidence, Apple approved an additional $110 billion in share repurchases, marking the largest ever buyback authorization by a U.S. company, according to EPFR analyst Winston Chua. This news propelled Apple’s market capitalization to $2.86 billion, just behind Microsoft (MSFT.O) at $3 trillion.

Friday’s stock surge added nearly $200 billion to Apple’s market value, demonstrating robust investor appetite. With the current stock price, executing Apple’s full buyback authorization would entail repurchasing nearly 4% of the company’s shares. The company’s optimistic forecast suggests confidence in upcoming product updates, starting with an iPad event on May 7, to stimulate demand in its hardware business following a period of sluggish growth.

Analysts praised CEO Tim Cook’s strategic moves, with eToro analyst Josh Gilbert highlighting Cook’s ability to reassure investors about Apple’s growth prospects. The significant buyback program aligns Apple with other tech giants and signifies the industry’s maturity, according to financial analysis head Danni Hewson at AJ Bell.

Unlike some competitors, such as Alphabet and Microsoft, Apple has not incurred substantial costs in generative AI investments, which has impacted its share performance. However, CEO Cook hinted at exciting developments in AI integration at the upcoming annual developer conference, generating anticipation among analysts.

Analysts at Bernstein foresee a robust iPhone 16 cycle driven by AI functionality and extended replacement cycles. The positive outlook prompted at least 13 analysts to raise their target price on Apple, with the median view reaching $200, indicating a 15% increase from the stock’s last closing price.

Despite its recent stock surge, Apple’s valuation remains relatively conservative, trading at 25 times its 12-month forward earnings estimates compared to 30.5 for Microsoft. Apple aims to regain its position as the world’s most valuable firm, fueled by its AI initiatives and anticipated product launches.

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