JPMorgan analysts assert that Apple (NASDAQ: AAPL) holds a strong position in the Edge AI hardware sector, primarily due to its vast iPhone user base and superior profitability potential when compared to its rivals.
The investment bank highlights Apple’s strategic emphasis on “Profit Total Addressable Market (TAM)” rather than “Revenue TAM.” This approach underscores Apple’s capacity to turn sales into substantial profits, a critical advantage.
Analysts at JPMorgan see further growth prospects for Apple, crediting the company’s less macro-sensitive customer demographic within its iPhone user base. They suggest that during upgrade cycles, Apple is in a prime position to secure higher profits, thanks to its loyal customer base and premium pricing model.
Despite the high investor enthusiasm for Edge AI companies recovering from recent market slowdowns, JPMorgan urges caution. They note that firms like Teradyne and Qualcomm are currently trading at relatively high valuations.
In contrast, Apple’s stock is viewed as more attractively priced, trading at the higher end of its historical range. This, combined with the potential for a significant upgrade cycle driven by AI capabilities, leads JPMorgan to consider Apple the top choice among Edge AI-related stocks.