Billionaire Hedge Fund Manager Thinks You’re Sleeping on Apple (Three Reasons Why)

Dan Loeb, the well-known Wall Street activist hedge fund manager, has a history of shaking things up, like when he took a significant stake in Yahoo, pushed out the CEO, and walked away with a $1 billion profit all the way back in 2012. Now, he’s focused on hyping up one of the biggest tech stocks in the world: Apple.

(Source: Wall Street Journal)

What’s got Loeb so excited about Apple? His hedge fund, Third Point, started buying Apple shares in April, and by June, it had climbed into their top seven U.S. holdings. While he’s keeping the exact figures under wraps, Loeb’s enthusiasm for Apple is loud and clear. He’s convinced that Apple’s upcoming AI features—called “Apple Intelligence”—will have iPhone users drooling. Set to launch in October with iOS 18, these features are expected to supercharge Siri, automate emails, and bring new tools for managing photos and images.

According to Third Point, these AI advancements could trigger what they’re calling a “forced upgrade cycle” for iPhone users. The reason? The new AI tools won’t be compatible with older iPhone models, potentially nudging millions of users to upgrade to the latest devices. Considering that iPhones brought in a staggering $39.3 billion last quarter—nearly 46% of Apple’s total revenue. Loeb’s betting that number is about to get a whole lot bigger.

But it’s not just AI that’s got Apple flexing its muscles. The company is also making moves to ditch third-party chips in favor of its own in-house silicon. By developing their own chips, Apple is slashing costs, boosting profit margins, and taking control of their product design. Remember when they moved the Mac lineup to Apple Silicon? Sales shot up 31%. The more Apple controls its chip design, the more they can innovate without waiting for the rest of the industry to catch up. 

You ever hear the phrase “number’s never lie?” Well if you look at the numbers, Apple is a steal compared to its AI peers. While other tech giants are trading at sky-high valuations, Apple’s price-to-earnings (P/E) ratio is practically a bargain.

Even with a 25% stock bump, Third Point thinks Apple is still one of Wall Street’s best-kept secrets. Funny how two of the biggest, most influential investors (Dan Loeb and Warren Buffett) can look at the same stock and see two totally different stories. Maybe Loeb’s onto something—or maybe he’s just hoping everyone else buys in and boosts his position.

Stock.News has positions in Apple.