Apple shares rise as record buybacks and sales growth forecasts draw investors By Reuters

By Aditya Soni

(Reuters) – Apple shares rose nearly 7% on Friday, as the iPhone maker's record share buyback plan and promise of sales growth attracted investors who had shunned the stock over concerns about weak demand and increased competition in China.

The company approved an additional $110 billion in share buybacks late Thursday, the largest in its history, and forecast third-quarter sales that beat modest market expectations.

The company was on track to add more than $170 billion to its market value if shares held up.

The prediction showed that Apple (NASDAQ:) was 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 caused some investors to doubt its status as an essential action.

“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 this earnings season 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 pace that satisfies their shareholders. Once that growth slows, and Apple is a prime example, then buybacks or dividends can persuade investors to keep the faith.” said Danni Hewson, head of financial analysis. in AJ Bell.

Unlike Alphabet (NASDAQ and Microsoft (NASDAQ ), 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, which partly fueled 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 trades at 25 times its 12-month earnings estimates, compared with 30.5 for Microsoft. The Windows maker had taken the crown of the world's most valuable company from Apple earlier this year, thanks to its efforts in artificial intelligence.