Apple’s stock rises as investors are drawn in by a record buyback and positive outlook.

Reuters, May 3 With the iPhone maker’s record stock repurchase plan and guarantee of sales growth, investors who had been avoiding the company due to worries about sluggish demand and rising competition in China were reassured, and Apple shares (AAPL.O), opens new tab, surged 7% on Friday.
Wall Street’s low expectations for the company’s fiscal third-quarter sales projection were surpassed late on Thursday.
Additionally, according to EPFR analyst Winston Chua, it authorised an extra $110 billion in share repurchases, the highest buyback authorization ever by a U.S. firm.

With the addition of around $200 billion in new stocks on Friday, Apple’s market capitalization now stands at $2.86 billion, second only to Microsoft (MSFT.O), opens new tab, with a $3 trillion valuation.
Implementing Apple’s whole repurchase authorization would mean repurchasing close to 4% of the company’s shares at Friday’s closing stock price.
After months of slow growth that caused some investors to question Apple’s standing as a must-own stock, the company is optimistic that product improvements, beginning with an iPad event on May 7, will stimulate demand in its hardware sector, according to its projection.

According to Josh Gilbert, an analyst at the investing platform eToro, “many investors had begun to question if Apple still has what it takes to deliver the top growth they have grown accustomed to over the years, but CEO Tim Cook turned on the charm and offered relief to investors.”
With the repurchase, Apple joined the ranks of other American tech behemoths that have lavished investors with cash during recent earnings seasons in an attempt to allay worries about growing expenditures in generative AI. It was also interpreted by some observers as a sign that the sector was developing.

“Growth stocks need to show that their growth is continuing at a rate that pleases their investors. Buybacks or dividends might encourage investors to maintain their trust whenever growth slows—Apple being a great example—said Danni Hewson, head of financial research at AJ Bell.
Since it hasn’t made significant investments in AI, Apple has not faced a cost increase like Alphabet and Microsoft (MSFT.O), opens new tab. However, investors have penalised the company’s delayed implementation of AI services, which has contributed to the 10% decline in its share price this year.

Apple CEO Tim Cook teased analysts with a statement that the company will be revealing “some very exciting things,” raising hopes that AI integrations would be unveiled at the company’s forthcoming, anticipated to be record-breaking annual developer conference.
“A strong iPhone 16 cycle fueled by AI functionality as well as elongated replacement cycles” was what Bernstein analysts predicted.
The consensus view on Apple was lifted to $200, 15% higher than the stock’s most recent closing price, by at least 13 analysts who increased their target price.
As of late, Apple’s stock was trading at 25 times its projected 12-month earnings, while Microsoft’s was at 30.5 times. Thanks to its AI initiatives, the manufacturer of Windows surpassed Apple earlier this year to become the most valuable company in the world.