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Apple: new M4 chips with AI focus give hope for a recovery

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Apple: new M4 chips with AI focus give hope for a recovery

“Artificial intelligence”. These magic words were enough to rekindle the title Apple, in yesterday’s session, it was responsible for the highest daily increase in almost a year. According to rumors reported by Bloomberg, the Cupertino giant is preparing to renew the entire Mac line with a new family of internal processors (M4) designed to make the most of AI. And everything suggests that, as soon as possible, artificial intelligence could also be implemented in iPhones.

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Apple prepares the launch of the new M4 chips

Five months ago Apple launched the first Macs with M3 chips, but it is already working on new generation processorThat it will be fitted to the new models between the end of this year and the beginning of 2025.

The new chip will come in at least three main varieties and will be built into iMacs, entry-level 14-inch MacBook Pros, high-end 14- and 16-inch MacBook Pros, and Mac minis.

It should be the turn of the new 13- and 15-inch MacBook Airs in spring 2025, before moving on to Mac Studio and Mac Pro by the end of next year, although plans are subject to possible changes.

In the last financial year, Mac sales fell by 27%. In October, Apple attempted to revive them with the launch of the M3, but the chip doesn’t appear to have had the desired effect, introducing marginal improvements over the previous year’s M2s.

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Focus on AI to reduce the distance from competitors

With the new processors, Apple aims to close the gap with other big tech companies in the field of artificial intelligence. Compared to other giants such as Microsoft or Google, in fact, the Cupertino company is perceived as a laggard on the AI ​​front.

The new chips could represent the first step in an overall push to integrate AI capabilities into all products. Most of the new functions will be designed to run on the devices themselves, rather than on remote servers, and will require faster chips.

Apple is also planning to make AI-focused updates to the iPhone’s processor as early as this year.

Apple stock jumped but has remained in decline since the beginning of the year

The rumors have put the turbo into the Apple sharesThat they closed yesterday’s session up by 4.3% to $175.04, recording the largest gain in the last 11 months. Year to date, the stock remains down 9%, with one of the worst performances of the S&P 500 index (up 9 percentage points in 2024). Among the Magnificent 7, very popular in 2023, only Tesla did worse with a drop of 30%.

One of the reasons why Apple has been penalized by the market in recent months has been its apparent lack of vision for future growth. The rumors about the new chip have provided a partial answer to these doubts, allowing the company to earn 112 billion dollars in capitalization in a single dayafter losing more than 460 billion from its all-time high reached in December.

Discount valuation offers interesting opportunities

Apple’s underperformance therefore reflects the lack of a well-defined AI strategy and several quarters of weak trends, despite the company’s strong financial position and proven ability to generate revenue.

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Il the stock trades at a P/E multiple of 27x, at a discount compared to other megacaps like Microsoft (38x) and essentially in line with the Nasdaq 100 benchmark.

The contained valuation and the possible boost of AI, according to JPMorgan, can fuel a growing enthusiasm among hedge fund investorsoffsetting challenges in China and the services business.

The hope, therefore, is that artificial intelligence can represent a new driving force for growth. In the next quarter, Apple is expected to still see a 4.6% drop in revenue, but a gradual recovery is expected over the course of the year. For analysts of BofAil market is underestimating Apple’s marginswhich could be “significantly higher” than expected, thanks to a better mix of services within the overall portfolio.”

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