Good morning. I dislike writing about politics, and doubt there is much geopolitical alpha to be had in markets, which are very good at discounting political information. But between what we learned last week about Biden’s mental capacity, and what we learned about France’s political transformation yesterday, I may have to write something about the repercussions of politics for markets before long. Send me a good angle: [email protected]

Apple gets an AI halo

Since May 1, Apple shares are up 24 per cent, adding over $600bn of market value. Only Nvidia has risen more in value; Microsoft ranks a distant third. It looks like what has happened is that Apple has become — perhaps in reality, or perhaps only in appearance — an AI stock.      

Over that past two months, expectations for Apple’s financial results have increased, but not expectation for the near- or even medium-term future. There has been basically no change in estimates for this year or for 2025, either for revenue or for earnings. You have to look out to 2026 and 2027 to see a change in analysts’ expectations. For 2027, expectations for revenue and earnings growth have increased by four and eight percentage points, respectively, since the start of May. This is a lot. The chart below shows 2022 and 2023 earnings growth for Apple, and growth expectations for the years to come, both as they were two months ago and as they are today: