The top pick of BofA for 2024 is Apple stock. This is the reason

 

Apple (NASDAQ:AAPL) has seen a recent decline in price, but Bank of America (BofA) remains optimistic about the tech giant and has ranked it as one of its top picks for 2024. This occurs together with the wider market experiencing a correction. BofA goes into detail in the note as to why it anticipates a robust June guide from the iPhone manufacturer and what factors to watch out for the remainder of the year.

What causes the downturn in Apple stock
The price of Apple's shares has recently declined, falling more than 5% in the most recent trading week and more than 11% this year. There are other factors at work in this retreat.

Apple's stock has surely been harmed by the wider market drop. Investors may be retreating from riskier assets, such as technology equities, during a slump as they become more cautious.

Nonetheless, this year's decrease in the price of Apple shares has more precise causes. Demand for iPhones is a factor; investors are worried about Apple's potential for future growth due to concerns about declining iPhone sales or a lack of innovation in the most recent releases.

The stock has also been hurt by the rivalry in China and Apple's apparent stagnation in artificial intelligence.

Bank of America is still positive about Apple's long-term prospects despite the recent decline.

BofA anticipates a rich catalyst route.
In a note sent to investors on Monday, BofA stated that they believe Apple has a "rich catalyst path" ahead of it and that defensive cash flows make it their top pick for 2024.

Re-upping the capital return at results, generative AI announcements at the Apple Worldwide Developers Conference, the autumn release of new iPhones, and a quarterly reacceleration in gross profit dollar growth are some of the catalysts.

According to BofA, "Our checks suggest that the four new iPhone models this year may be released with the same application processor (A18), which can enable improved AI/machine learning performance."

In other news, BofA is still projecting double-digit revenue growth for services year over year and anticipates that these margins will increase as the company grows and takes use of long-term prospects like procuring server chips internally and lowering dependency on public cloud providers.

Bank of America went on, "We expect continued strong revenue growth in licencing, the App Store, iCloud, and subscriptions."

The bank noted that it expects Apple to outperform analyst consensus projections when it reports on May 2, maintaining its Buy rating and $225 price target on Apple stock. They predict that Apple's new Vision Pro sales might generate up to $1 billion in income.

But BofA reduced its forecast for iPhone sales to 40 million devices for the upcoming quarter (F3Q24), which ends in June, from its earlier estimate of 43 million. This is consistent with a declining demand for phones overall.

Nevertheless, the investment bank feels that the present price of Apple's shares already accounts for the current state of decreased demand.