Billionaire hedge fund manager Daniel Loeb sees room for Apple’s (AAPL-Q) share price to increase, especially if the technology company successfully uses artificial intelligence for its iOS mobile operating system.
“Despite the recent strong stock appreciation, we see room for significant upside as the magnitude of this new AI opportunity surprises,” Loeb wrote in a letter to investors seen by Reuters on Friday. Third Point built a position in Apple in April, Loeb wrote.
Loeb, whose firm manages assets of around $11 billion, wrote that Apple was already among the company’s five biggest winners in the second quarter, when his TP Offshore Fund gained 1.8 percent. In the first half of the year, the fund had returned almost 10 percent.
Apple, Loeb wrote, was “undervalued” by institutional investors who feared the company could become an “AI loser.” However, Third Point sees things differently, noting that “AI-related demand could lead to a significant improvement in Apple’s revenue and profits over the next few years.”
Demand for newer iPhones will increase because Apple Intelligence features are not backwards compatible and Apple’s App Store will likely be the primary distribution platform for new, consumer-focused AI apps, the letter said.
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