U.S. stocks edge higher; solid earnings season continues
Investing.com - UBS maintained its Neutral rating and $210.00 price target on Apple (NASDAQ:AAPL) Thursday, as the tech giant reportedly considers acquiring or partnering with Perplexity AI. Currently trading at $200.43, Apple maintains a strong financial health score of 2.69 according to InvestingPro analysis, though the stock appears overvalued based on its Fair Value assessment.
The potential acquisition would mark Apple’s largest transaction in company history, with a price tag of at least $14 billion, representing over 10% of Apple’s annual free cash flow, according to UBS.
While financially manageable, UBS noted Apple’s "mixed" track record integrating larger acquisitions such as Beats (estimated at $3 billion) and Intel (NASDAQ:INTC)’s modem business (estimated at $1 billion).
UBS also highlighted that Perplexity has faced allegations of unauthorized content use and plagiarism, adding complexity to any potential deal.
The firm suggested that given Apple’s "underwhelming" AI efforts to date, a Perplexity acquisition might be viewed as "defensive in nature, not a positive catalyst," particularly with remedies in the Google DOJ case expected in August 2025.
In other recent news, Apple has been in the spotlight with a series of developments. JPMorgan has lowered its price target for Apple to $230 from $240, citing concerns over iPhone 17 demand later this year, while maintaining an Overweight rating. The investment bank forecasts modest growth for Apple’s fiscal year 2026, with a more robust revenue acceleration expected in fiscal 2027. In legal matters, Apple faces a proposed class-action lawsuit from shareholders, alleging the company misrepresented the timeline for integrating advanced AI features into its Siri assistant, affecting iPhone sales. Meanwhile, Apple’s smartphone sales have surged, reaching the highest market share since the pandemic, driven by subsidies in China and other regions. Analyst Ming-Chi Kuo from TF International Securities has speculated that Apple’s purchase of President Trump’s "gold cards" might be an attempt to divert attention from potential iPhone tariffs. These tariffs, threatened by Trump, could significantly impact iPhone prices in the U.S., prompting Apple to diversify its supply chain. On a related note, Alphabet (NASDAQ:GOOGL) has maintained a Buy rating from BofA Securities, highlighting mixed investor sentiment amid debates on AI and regulatory challenges.
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