AGS NEWS – Apple’s shares experienced a 7% surge on Friday, driven by the tech giant’s announcement of a record stock buyback plan and optimistic sales projections, which attracted investors who had previously been cautious about the stock due to concerns over weak demand and increased competition in China.

Late on Thursday, Apple forecasted fiscal third-quarter sales that surpassed Wall Street’s modest expectations.

The company approved an additional $110 billion in share repurchases, marking the largest ever buyback authorization by a U.S. company, according to EPFR analyst Winston Chua.

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Friday’s stock gain resulted in nearly $200 billion being added to Apple’s market capitalization, bringing it to $2.86 trillion, second only to Microsoft, valued at $3 trillion.

At the current stock price, executing Apple’s full buyback authorization would involve repurchasing nearly 4% of the company’s shares.

The company’s positive forecast suggests confidence in upcoming product updates, starting with an iPad event on May 7, which is expected to drive demand in its hardware business after a period of sluggish growth.

According to analyst Josh Gilbert from investment platform eToro, Apple CEO Tim Cook’s reassurance to investors has alleviated concerns about the company’s growth potential, which had been questioned by some investors.

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The buyback aligns Apple with other U.S. tech giants that have been returning cash to investors in recent earnings seasons to address concerns about increased investments in generative AI and indicate industry maturity.

Danni Hewson, head of financial analysis at AJ Bell, noted that growth stocks like Apple need to demonstrate continued growth to satisfy shareholders.

When growth slows, buybacks or dividends can help maintain investor confidence.

Unlike Alphabet and Microsoft, Apple has not experienced a significant increase in costs due to large AI investments.

However, its slow rollout of AI services has impacted investor sentiment, contributing to a 10% decline in its share price this year.

CEO Cook hinted at exciting developments to be announced at the company’s upcoming annual developer conference, fueling expectations of AI integrations.

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Analysts anticipate a strong iPhone 16 cycle driven by AI functionality and prolonged replacement cycles.

As a result of the positive news, at least 13 analysts raised their target price on Apple, with the median view reaching $200, reflecting a 15% increase from the stock’s last closing price.

Apple’s stock is currently trading at 25 times its 12-month forward earnings estimates, compared to 30.5 for Microsoft.

Earlier this year, Microsoft overtook Apple as the world’s most valuable firm, partly due to its AI efforts.