In a statement to The Verge on July 8, an Apple spokesman said, “Over a decade ago, Apple partnered with Intel to design and develop Thunderbolt, and today our customers enjoy the speed and flexibility it brings to every Mac. We remain committed to the future of Thunderbolt and will support it in Macs with Apple silicon.”
The reassuring statement from Apple comes the same day that Intel announced details on its upcoming high-speed data transfer component known as Thunderbolt 4. Intel says that its new USB-C connectivity standard will improve its video resolution and data requirements on future Apple and PC computer products.
The news also follows Apple’s official announcement last month that it would no longer be using Intel’s chips in its upcoming Mac-line starting in late 2020. Apple stated that it plans to make its own custom-made ARM chips which are expected to come with a range of enhancements that are currently being employed in Apple’s mobile devices.
Apple’s stock was up 2% at $381.37 as of market close on July 8 while Intel rose 1% to $58.61.
The transition from Intel chips to Apple’s silicon powered chips closes a 15-year relationship with the chip-maker. Intel sold chips to Apple at $3.4 billion per year, amounting to less than 5% of Intel’s annual sales. The overall transition away from Intel is estimated to take Apple two years.
According to CCS Insight analyst Geoff Blaber, “Apple has made enormous investments in ARM-chip design and it’s logical that it extends that capability beyond the iPhone and iPad. He added, “Its motivations for doing so include reducing its dependence on Intel, maximizing its silicon investment, boosting performance, and giving itself more flexibility and agility when it comes to future products.”
Meanwhile, Deutsche Bank analyst Jeriel Ong has focused on Apple’s rapid growth during the pandemic saying on July 8, “It seems that AAPL is reaching all-time highs every week, and that has us nervous.” With instability in the world, where Apple is the largest company, he added that Apple’s “quick rise has some investors a bit anxious.” Nevertheless he appreciates the upside that Apple’s shares are anticipated to offer. The analyst maintained his Buy rating on Apple’s stock and raised the price target from $380 to $400, suggesting upside potential of 5%.
So far, Apple’s stock is up 30% year-to-date with 27 analysts assigning a Buy rating, 6 Hold, and 1 Sell, which altogether results in a consensus of a Strong Buy. The average analyst price target stands at $355.52 which implies a downside potential of 7%. (See Apple’s stock analysis on TipRanks).