After strong week last week, here’s how Apple stock can keep its momentum

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Apple shareholders anticipated a strong close to the summer, and their expectations are being met. The company’s third-quarter earnings and revenue surpassed estimates last week. On Wednesday, CEO Tim Cook joined President Donald Trump at the White House to announce an additional $100 billion in U.S. investments, driving a significant surge in the stock price.

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“It’s finally been a good week for Apple bulls after a frustrating year,” wrote Dan Ives of Wedbush in a research note Friday.

Apple’s lack of a robust artificial-intelligence strategy relative to its peers has been one reason for frustration. This dilemma has been a “black cloud over the stock,” Ives said, as he outlined three steps the company can take to prove Apple is a serious AI player.

Most notably, Ives is advocating for Apple to buy Perplexity, the AI search-engine start-up. Some on Wall Street have been pushing for a Perplexity acquisition this year, and Ives said he’d be comfortable even if Apple paid $30 billion or more to make that happen.

Apple also needs to double down on its partnership with Alphabet, Ives argued, by fully integrating Google’s Gemini AI into the iPhone. Any such move may draw regulatory scrutiny, with the two companies’ Google search partnership already under the microscope in Google’s ongoing antitrust litigation. But Ives believes expanding the relationship is a smart bet.

Lastly, Ives thinks Apple needs more AI innovators in the building, though he conceded Cook is likely to stick around for the foreseeable future. “The current management team including Cook has Apple on an AI treadmill on 2.5 [miles-per-hour] speed going nowhere,” Ives wrote.

Via: Barrons.com

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