Apple Potentially Stepping Towards a Significant Purchase?
Apple, the tech giant with a robust business, is rumoured to be considering a significant move in the field of artificial intelligence (AI). With over $55 billion in cash and marketable securities at its disposal, the company has the resources to make a big acquisition to bolster its AI strategy.
The company's stock, while not all that cheap at more than 30 times its trailing earnings, can be a good long-term investment option. However, investing in Apple stock based on rumours of a big acquisition is risky.
Over the past nine months, Apple has generated nearly $82 billion in cash from its day-to-day operating activities. This substantial cash flow, combined with a conservative approach to deploying next-gen technologies, suggests that Apple may be ready to make a bold move.
The market is currently flooded with chatbots and AI-powered products and services. To stay competitive, Apple may be pushed to be more aggressive in the field of AI due to competition. Delaying the rollout of AI features for its iPhones until next year could potentially see Apple falling even further behind its rivals.
CEO Tim Cook has hinted that even a large deal may be a possibility, stating that "we are not stuck on a certain size company." He further added that the company may be willing to put that money to work and is open to mergers & acquisitions (M&A).
Two potential acquisitions that have been suggested are the French AI company Mistral AI, valued at around 7 to 10 billion dollars, and the US company Perplexity, valued at about 18 billion dollars. These acquisitions are considered to supplement Apple's internal AI development efforts.
Apple's business remains robust, with over 1.5 billion active iPhone users and a vast ecosystem of products and services. However, the potential for tariffs and a slowdown in the economy could impact Apple's performance in the short term.
In conclusion, while Apple's stock performance in 2021 has been poor, with a decrease of more than 12%, the company's resources and potential for growth in the AI sector suggest that it remains a great option to consider for long-term (e.g., 10-plus years) investments. The company's slow and conservative approach to deploying next-gen technologies, particularly in the field of artificial intelligence, may change with a potential big move or acquisition.
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