Artificial intelligence (AI) is increasingly influencing the stock market, particularly with major players like Snap Inc. and Apple Inc. These companies are positioning themselves at the forefront of AI innovation, showcasing how technology can drive performance and investor confidence.
Snap Inc., known for its popular social media platform Snapchat, has faced challenges recently, with its stock declining by 34.3% throughout 2024. Despite this, the company's aggressive pivot toward AI and augmented reality (AR) is setting the stage for potential recovery and growth heading toward 2025. According to Zacks Investment Research, "The company's strategic integration of AI across its platform... demonstrates its commitment to innovation and long-term growth." This approach focuses on content discovery and advertising optimization, effectively enhancing user experience and engagement.
Indeed, Snap has seen impressive user growth, boasting 443 million daily active users by the third quarter of 2024, reflecting a 9% increase year-over-year. The time spent watching content on the platform surged by 25%, and Snap’s Spotlight feature has topped 500 million monthly active users. The platform's steady growth, especially among younger users where it enjoys 75% penetration rates in developed markets, suggests strong core value, making it well-positioned for recovery.
Financially, Snap's prospects appear brighter, with third-quarter revenues climbing 15% year-over-year to reach $1.37 billion. One significant contributor to this income is the company's subscription service, Snapchat+, which has amassed 12 million subscribers. The drive toward direct-response advertising has also resulted in the doubling of active advertisers, indicating vibrant growth momentum. With forecasts claiming fourth-quarter revenues may range from $1.510 billion to $1.560 billion, reflecting year-over-year growth between 11% and 15%, Snap seems destined for recovery. Snap is showing promising signs of recovery and utilizing its AI investments wisely.
On the other hand, Apple Inc. recently achieved its all-time high stock price, hitting $260.10 on December 26, with soaring investor enthusiasm—its stock price had surged by 32% year-to-date, outperforming the S&P 500 Index. Analysts attribute this remarkable rally partly to Apple’s enhanced commitment to AI technologies. The introduction of "Apple Intelligence"—a personal intelligence system launched in June—brings together generative models and personal user data, representing a new chapter for Apple as it seeks to capitalize on this burgeoning field. The debut of AI features was highlighted during Apple’s "Glowtime" event, where the latest iPhone models were unveiled.
According to Barchart, "The introduction of Apple Intelligence positions the company to benefit from... AI-driven upgrade cycles for its iPhone." This feature-centric innovation could lead to considerable revenue streams, especially as Apple gears up for future product releases. Initially, AI features will be compatible with only the iPhone 15 Pro and the new iPhone 16 models, setting the stage for subsequent device upgrades across Apple's vast installed base. Such integration of AI applications is anticipated to substantially bolster Apple’s service revenue by billions over the next few years.
Apple’s ability to embed AI across its product ecosystem, including enhanced writing tools and more intuitive functionalities for Siri and other apps, is projected to boost customer engagement significantly. Services revenue recently reached record-breaking figures, surpassing $25 billion with double-digit growth notable across both developed and developing markets. The incorporation of AI-driven features is aligned with Apple's strategy to not only bolster product demand but also attract new customers to its ecosystem.
Yet, amid this AI-driven optimism, Apple faces external challenges. Broader economic uncertainties, particularly slower interest rate cuts by the Federal Reserve, have stirred concerns about consumer discretionary spending, potentially dampening the financial momentum going forward. While Apple stock remains rated as “Moderate Buy” by analysts, its recent rally has factored much of the optimism surrounding its AI initiatives, leaving little room for significant additional growth without exceeding market expectations.
Both Snap and Apple exemplify the transformative power of AI on stock market performance. With Snap betting on innovative approaches to user engagement through AI, and Apple leveraging its expansive ecosystem to integrate AI seamlessly, these companies highlight how technology can shape not only consumer experience but also impactful investor sentiment as they approach 2025.
