Yahoo Finance Apple Jumps on the AI Bandwagon: ETFs to Buy
Apple AAPL, which is way behind its competitors in adopting artificial intelligence (AI), is finally catching up following the launch of new AI features at its long-anticipated Worldwide Developers Conference (WWDC). The introduction of numerous AI-powered features is expected to kickstart the next upgrade cycle, enhancing the company's performance and restoring investor confidence in Apple.
The stock jumped 7% to a record high, marking the biggest one-day jump since November 2022 and the first all-time high of 2024. The gain added $215.1 billion to the company’s market capitalization, translating to one of the biggest single-day value additions by any company in history, according to data compiled by Bloomberg (read: Forget iPhone: 4 Reasons to Bet on Apple ETFs).
Investors seeking to tap the upcoming boom should buy ETFs having the largest allocation to the tech titan. Technology Select Sector SPDR Fund XLK, Vanguard Information Technology ETF VGT, MSCI Information Technology Index ETF FTEC, iShares US Technology ETF IYW and Vanguard Mega Cap Growth ETF MGK have Apple as the top or second firm with a double-digit allocation and carry a Zacks Rank #1 (Strong Buy) or 2 (Buy).
New AI Features
At the annual WWDC on Monday, the iPhone maker unveiled a brand new AI feature called Apple Intelligence for iPhones, iPads and Macs. The technology will help summarize text, create original images and retrieve the most relevant data when users need it.
Apple Intelligence unlocks new ways for users to enhance their writing and communicate more effectively. With brand-new systemwide Writing Tools built into iOS 18, iPadOS 18 and macOS Sequoia, users can rewrite, proofread and summarize text nearly everywhere they write, including Mail, Notes, Pages and third-party apps. The company will push this feature as integral to its various operating system offerings, including iOS, macOS and the latest, visionOS (read: Bet on "Apple Intelligence" With These ETFs).
Apple Intelligence also includes the biggest update to Siri since it was announced more than a decade ago. The feature will be “more deeply integrated” into its operating systems. In the case of iOS, this will mean trading the familiar Siri icon for a blue, glowing border that surrounds the desktop while in use. The new AI technology will also bring new features to emojis with personalized Genmoji by using a text field to build customized emojis.
Apple announced a partnership with ChatGPT maker OpenAI, which provides customers access to ChatGPT via Siri at no extra cost. Apple Intelligence will be rolled out later this year, but some features, including the ability for Siri to precisely control features within apps, won’t come until next year. Support for languages beyond English will also arrive later.
Analysts Turn Bullish
Wall Street is once again bullish on Apple in the wake of the company's new AI features. At least 13 analysts raised their price targets on Apple after the event, with some saying the latest features could encourage a frenzy of new purchases as the company prepares to announce a new line of iPhones in autumn.
An analyst at Wedbush expects the addition of the new tools to iPhone to spark "an AI-driven iPhone upgrade cycle starting with iPhone 16." The analyst expects AI to add $30 to $40 per share to Apple's growth story. Meanwhile, an analyst at Bank of America is also optimistic that the features will lead to “an upgrade cycle for AI-enabled IntelliPhones.”
ETFs in Focus
Technology Select Sector SPDR Fund (XLK)
Technology Select Sector SPDR Fund targets the broad technology sector and follows the Technology Select Sector Index. It holds about 65 securities in its basket, with Apple making up 21% share. Technology Select Sector SPDR Fund has key holdings in software, semiconductors and semiconductor equipment, and technology hardware, storage and peripherals.
Technology Select Sector SPDR Fund is the most popular and heavily traded ETF, with an AUM of $67.1 billion and an average daily volume of 5.5 million shares. The fund charges 9 bps in fees per year.
Vanguard Information Technology ETF (VGT)
Vanguard Information Technology ETF manages $70 billion in its asset base and provides exposure to 313 technology stocks. It currently tracks the MSCI US Investable Market Information Technology 25/50 Index. Here, Apple accounts for a 15.3% share. Semiconductors, systems software, technology hardware storage & peripheral and application software are the top four sectors.
Vanguard Information Technology ETF has an expense ratio of 0.10%, whereas volume is solid at nearly 412,000 shares (read: Can Tech ETFs Keep Up Their Winning Momentum?).
MSCI Information Technology Index ETF (FTEC)
MSCI Information Technology Index ETF is home to 305 technology stocks with an AUM of $10.1 billion. It follows the MSCI USA IMI Information Technology Index. Apple accounts for a 15.8% share in the basket.
MSCI Information Technology Index ETF has an expense ratio of 0.08%, while volume is solid at 207,000 shares a day.
iShares US Technology ETF (IYW)
iShares Dow Jones US Technology ETF tracks the Russell 1000 Technology RIC 22.5/45 Capped Index, giving investors exposure to 131 U.S. electronics, computer software and hardware, and informational technology companies. Apple makes up 15.5% of the assets.
iShares Dow Jones US Technology ETF has an AUM of $17.7 billion and charges 40 bps in fees and expenses. Volume is good as it exchanges 911,000 shares a day.
Vanguard Mega Cap Growth ETF (MGK)
Vanguard Mega Cap Growth ETF offers diversified exposure to the largest growth stocks in the U.S. market. It tracks the CRSP US Mega Cap Growth Index and holds 79 securities in its basket, with Apple accounting for 12.4% of the total assets.
Vanguard Mega Cap Growth ETF charges 7 bps in annual fees and trades in a good volume of around 277,000 shares a day on average. The fund has an AUM of $20.4 billion.
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Apple Inc. (AAPL) : Free Stock Analysis Report
Technology Select Sector SPDR ETF (XLK): ETF Research Reports
Fidelity MSCI Information Technology Index ETF (FTEC): ETF Research Reports
iShares U.S. Technology ETF (IYW): ETF Research Reports
Vanguard Information Technology ETF (VGT): ETF Research Reports
Vanguard Mega Cap Growth ETF (MGK): ETF Research Reports
