Notice of Index Modifications: Ferrari ETPs

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Author

Violeta Todorova

Date

Apple's AI Adoption Could Push Prices Way Higher

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  • Technical breakout suggests a new bull trend has started
  • Apple’s rally is in the early stages and could unfold significantly higher

Apple’s Solid Fundamentals and Optimistic Outlook from WWDC

While the company had its best days behind it and the rate of innovation had slowed, Apple’s Worldwide Developer Conference (WWDC) last week did not disappoint. Investors initially sold off the stock; however, the price rebounded subsequently and is currently trading at a fresh record high.

The introduction of iOS18 and Apple intelligence at WWDC is poised to fuel a multi-year upgrade cycle across Apple’s extensive installed base of billions of devices. This strategic initiative is expected to drive sustained innovation and revenue growth in the coming years.

The company continues to exhibit robust fundamentals and last week’s conference underscored the potential for a multi-year hardware upgrade cycle and significant growth in Services revenue.

Apple was the only one among the big tech companies that did not announce artificial intelligence (AI) adoption over the past year. While some investors believe Apple’s share price rally will continue, others are of the view that the excitement around the announcement on AI or what Apple rephrased Apple Intelligence would fade soon.

In our view, Apple’s rally could extend in the coming year, despite the currently elevated valuation multiples, as the company seems poised to embark on one of its biggest growth phases with Apple Intelligence.

Financial Strength and Growth Potential

Apple posted a YoY fall in revenues in the last fiscal year, with analysts expecting the company’s sales to rise by just under 1% in the current fiscal year ending in September. However, Apple is in a solid financial health, with $67.15 billion in cash and short-term investments, supplemented by $95.19 billion in marketable securities.

Apple’s strong profitability, exceeding $100 billion annually in net income, EBITDA, and free cash flow, supports sustained dividend payments, share buybacks, and future investments without excessive leverage. This financial robustness, alongside innovations like the AI advancements announced at WWDC, reinforces Apple’s position as a leading force in the technology sector.

Apple’s consistent product innovation and financial strength bode well for its future growth prospects. Despite the sharp post-WWDC share price movement, the bullish sentiment surrounding the stock is likely to persist for longer as more and more investors begin to recognise Apple’s long-term growth potential.

Since Apple’s latest iPhone will likely go on sale in September, the company will realize revenues from the product in the next fiscal year. According to consensus estimates Apple’s revenue in the next fiscal year could rise 6.4%, but these estimates could turn out to be too conservative if we see an upgrade cycle with iPhone 16.

Apple’s capability to scale AI offerings without incurring huge capital expenditures is a clear benefit. The iPhone 16 should benefit from an upgrade cycle potential. The new iPhone 16, with its new class of capabilities, will drive demand, especially after two years of modest iPhone growth. Early adopters are likely to support demand due to the iPhone 16’s advancements in generative AI applications, touch-based apps, 5G connectivity, and enhanced cameras.

The iPhone 16 is likely to feature primarily in-house developed generative AI applications, with third-party developed apps anticipated to appear in the iPhone 17, likely sparking another upgrade cycle. Additionally, Apple is expected to integrate generative AI functionality into its Macs, iPads, and even Watches, progressively enhancing these devices’ capabilities and encouraging more users to upgrade.

A graph of a stock market

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Source: TradingView

Technical Analysis

After two tepid years of iPhone growth and the share price broadly trading in a range, the announcement from the WWDC have pushed the price of Apple through its key resistance of $199.62. While the stock may appear overbought on a short-term basis after its strong run last week, it’s worth noticing that the share price performance has only just caught up pace with the broader market.

The technical breakout is a very encouraging sign and suggests that higher price levels are likely to unfold. The first potential upside price target based on the breakout is in the range between $230.00 and $235.00. However, in the short-term the stock is overbought and a pull back to unwind the overbought momentum conditions could unfold.

The Relative Strength Index (RSI) has moved firmly in the bull market range pointing to higher prices over the long-term. Given the long period of time the share price consolidated and the impulsive nature of the breakout, we are of the view that the primary up trend has only just started. Therefore, levels towards $250 appear easily achievable in the next 12 months.

Professional investors looking for magnified exposure to Apple may consider Leverage Shares +3x Long Apple and -3x Short Apple ETPs.

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

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Terms and Conditions

Notice

If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.

If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.

Risk Warnings

The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.

This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.

Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.

This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.

United States Visitors

The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.

Persons accessing this website in the European Economic Area

Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.

Leverage Investment

Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.

Cookies

Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.

This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2.

By clicking you agree to the Terms and Conditions displayed.