How to Use AI for Investing Pt. 2

Good Evening! 👋

Dear Investor,

Happy Wealth Wednesday.

Last week I talked about how I use ChatGPT to research stocks, and the response was huge. A lot of you asked the same question: how do you use Perplexity to understand a company’s finances?

So let’s talk about it.

Perplexity has quietly become my go-to AI tool for two things: research and staying up to date. It pulls from verified sources and gives you real-time information that ChatGPT just doesn’t have.

In this week’s issue, I’ll show you a few steps of how I use Perplexity to analyze financials, review earnings, and keep up with the latest stock news.

Keep in mind this is a very high level overview and researching a stock is much more in depth than this.

1. Understand Company’s Revenue

One of the best ways to start analyzing a company is by seeing where its money actually comes from. Most investors know what a company sells, but not how much each part of the business contributes to total revenue.

Perplexity makes this simple. You can ask it to break down a company’s revenue by product or segment, and it will pull the most recent numbers directly from reliable sources.

Example prompt:
Summarize Apple’s 2024 revenue by product in paragraph form. Also, make a pie chart with bright colors that is easy to understand.

Answer:

“Apple generated a total of $391.1 billion in revenue during fiscal year 2024, which ended September 28, 2024. The iPhone remained the company's dominant revenue driver, accounting for more than half of total sales at $201.2 billion, representing 51% of Apple's revenue. This hardware segment continued its long-standing position as Apple's flagship product line, though revenue growth remained relatively flat compared to the previous year with just 0.3% year-over-year growth.​

The Services segment emerged as the second-largest revenue category and the fastest-growing part of Apple's business, generating $96.2 billion and representing 25% of total revenue. This segment, which includes the App Store, iCloud, Apple Music, advertising, and other subscription services, experienced impressive 13% year-over-year growth. Services proved to be Apple's most profitable business unit, boasting gross margins of 73.9%—nearly double the 37.2% margins of its hardware division.​

The Mac computer line contributed $30.0 billion to Apple's revenue, accounting for 8% of the total. Mac sales showed positive momentum with 2.1% growth compared to fiscal 2023. Meanwhile, iPad sales generated $26.7 billion, representing 7% of revenue, though this segment experienced a 5.7% decline year-over-year due to lower sales of iPad Pro and entry-level models. The Wearables, Home and Accessories category, which includes Apple Watch, AirPods, HomePod, and other accessories, brought in $37.0 billion and accounted for 9% of revenue, but saw a 7% decline in sales compared to the previous year.​”

In seconds, Perplexity will show you exactly how Apple earns its money, from iPhone sales to services and wearables. The pie chart helps you see which parts of the business are driving growth and which ones are slowing down. This gives you instant context before you dig deeper into the numbers.

2. See Where the Sales Are Coming From

It is not enough to know what a company sells. You also need to know where it sells. Understanding which regions drive the most revenue helps you see where growth is happening and where demand might be slowing.

Perplexity makes this easy. You can ask it to break down a company’s revenue by region, and it will pull the latest numbers directly from verified financial reports.

Example prompt:
break down Apple’s 2024 revenue by region in paragraph form and by pie chart.

Answer:

“Apple's fiscal year 2024 generated $391.0 billion in total revenue across five major geographic regions, with the Americas serving as the company's largest market. The Americas region, which encompasses the United States, Canada, and Latin America, contributed $167.0 billion to Apple's top line, representing 43% of total revenue. This region demonstrated steady growth with a 2.8% year-over-year increase from fiscal 2023, reinforcing its position as Apple's strongest and most stable market. The United States alone accounted for approximately $142 billion, making it Apple's single largest country market at 36% of global revenue.​

Europe emerged as Apple's second-largest regional market and its fastest-growing geography in fiscal 2024, generating $101.3 billion in revenue and capturing 26% of total sales. This region, which includes European countries along with India, the Middle East, and Africa in Apple's reporting structure, posted impressive 7% year-over-year growth. The strong European performance was driven by increased demand for premium iPhones and successful trade-in programs across key markets including Germany, France, and the United Kingdom.​

Greater China, which includes mainland China, Hong Kong, and Taiwan, remained Apple's third-largest market despite facing headwinds, contributing $67.0 billion and representing 17% of total revenue. This region was the only major market to experience a decline in fiscal 2024, with revenue falling 8% year-over-year compared to fiscal 2023's $72.6 billion. The decline was attributed to intensifying competition from local Chinese smartphone manufacturers like Huawei and Xiaomi, economic pressures in the region, and ongoing U.S.-China trade tensions.​

The Rest of Asia Pacific region, which includes Australia and Asian countries outside of Greater China and Japan, generated $30.7 billion in revenue, accounting for 8% of Apple's total sales. This region showed positive momentum with 3.5% year-over-year growth, driven particularly by India's surging demand for Apple products. Japan rounded out Apple's geographic portfolio with $25.0 billion in revenue, representing 6% of total sales, and posted 3.3% growth compared to the prior year”

In seconds, you will see exactly how much each region contributes to Apple’s total revenue. This is important because it helps you understand where a company is earning the most money and where it might be losing momentum. If one region starts slowing down or facing new regulations, that can directly impact growth. On the other hand, seeing strong sales in emerging markets could signal new opportunities. Knowing where the money is coming from gives you a clearer view of how stable or vulnerable the business really is.

3. Understand Financial Changes

Knowing how a company’s financials change year over year is one of the smartest things you can do as an investor. It helps you see whether the business is actually improving or just maintaining the status quo.

Example prompt:
What are the biggest year-over-year (2023 and 2024) changes in Apple’s income statement and balance sheet? Put the response in paragraph form.

Answer:

“Apple's Biggest Year-Over-Year Changes (FY2023 vs FY2024)

Income Statement

The most dramatic change in Apple's income statement was income tax expense, which skyrocketed 78% from $16.7 billion to $29.7 billion. This massive $13 billion increase was largely driven by a one-time $10.2 billion tax charge related to a European court ruling against Ireland. Without this charge, Apple's taxes would have been much lower.​

Ironically, while Apple's operating income grew 8% to $123.2 billion, its net income actually fell 3% to $93.7 billion because of the huge tax hit. On the positive side, Apple showed strong efficiency by growing gross profit 7% to $180.7 billion while cutting cost of revenue by 2%. This meant Apple made more money on each product sold, with gross margins improving from 44% to 46%.​

Revenue grew modestly by 2% to $391 billion, while research and development spending increased 5% to $31.4 billion as Apple invested heavily in AI features and new products.​

Balance Sheet

The biggest balance sheet change was retained earnings, which dropped $18.9 billion to negative $19.2 billion. This happened because Apple spent a massive $95 billion buying back its own shares throughout 2024. While buybacks benefit shareholders by reducing share count, they drain retained earnings significantly.​

Current liabilities jumped 21% to $176.4 billion, driven by a 30% increase in short-term debt to $22.5 billion. At the same time, Apple reduced long-term debt by 9% to $96.6 billion, shifting to more flexible short-term financing. Stockholders' equity fell 8% to $57 billion due to the aggressive buyback program.​

On the asset side, property, plant and equipment decreased 16% to $45.7 billion as Apple depreciated existing assets and reduced capital spending. Meanwhile, inventory rose 15% to $7.3 billion to support product launches.”

Looking at changes in revenue, profit margins, debt levels, and cash reserves gives you a clear view of the company’s direction. Is revenue growing faster than expenses? Is the company paying off debt or taking on more? Are cash reserves shrinking or building up? These details show you how healthy the business really is and whether management is making good financial decisions.

4. Compare Competitors

One of the best ways to understand a company is to compare it to others in the same space. You might like Apple, but how does it stack up against Microsoft? Are you paying a fair price for its growth, or is another company offering more value?

Example prompt:
Compare the valuation metrics of Apple and Microsoft include P/E, EV/EBITDA, and revenue growth. Put this in paragraph form and chart form that is easy to understand.

Answer:

Apple vs Microsoft Valuation Comparison

As of October 2025, Apple and Microsoft present contrasting valuation profiles despite both being premium tech giants. Apple currently trades at a P/E ratio of 35.04, which represents a 53% premium to its 10-year historical average of 22.93. Microsoft commands a higher P/E ratio of 37.97, trading 21% above its 10-year average of 31.41. This means Microsoft trades at roughly an 8% premium to Apple on a price-to-earnings basis, suggesting investors are willing to pay more for each dollar of Microsoft's earnings.​

The EV/EBITDA multiples tell a slightly different story. Apple's EV/EBITDA stands at 26.2x, elevated significantly from its historical median of 17.43. Microsoft's EV/EBITDA is lower at 24.5x, making it the more attractively valued company on this metric despite its higher P/E ratio. Microsoft's EV/EBITDA has remained relatively stable around 24-26x over the past two years, while Apple's has expanded considerably from around 18x in fiscal 2022 to current levels. This suggests Apple's enterprise value has grown faster relative to its cash generation capabilities compared to Microsoft.​

The most striking difference emerges in revenue growth. Microsoft delivered impressive 15.7% revenue growth in fiscal year 2024, reaching $245.1 billion. This growth was driven primarily by Microsoft's cloud computing division Azure and its aggressive push into artificial intelligence through its partnership with OpenAI. In stark contrast, Apple achieved only 2.0% revenue growth in fiscal 2024, generating $391.0 billion in total revenue. Apple's modest growth reflects challenges in its core iPhone business, declining iPad and Wearables sales, and economic headwinds in China—its third-largest market. Services remained Apple's growth engine with 12.9% expansion, but this couldn't offset weakness across hardware categories.​

The valuation-to-growth relationship reveals why investors might favor Microsoft despite its premium valuation. Microsoft is growing revenue nearly 8 times faster than Apple while trading at just 8% higher P/E and actually commanding a lower EV/EBITDA multiple. Microsoft's gross profit margin of 69.8% also significantly exceeds Apple's 46.2%, demonstrating superior pricing power and operational efficiency. Looking forward, analysts project Microsoft will maintain a 15% compound annual growth rate over the next five years, compared to just 6.5% for Apple. This growth differential, combined with Microsoft's leadership position in AI and cloud computing, helps justify its premium valuation multiples relative to historical averages.​

This type of comparison matters because it helps you see what the market is rewarding. If one company has faster growth but trades at a similar valuation, that could point to an opportunity. On the other hand, if a stock trades at a premium but its growth is slowing, it might be time to take a closer look. Comparing competitors gives you context, and context is everything in investing.

5. Analyst and Price Targets

It is always helpful to know what analysts think about the company you are researching. Their price targets and ratings give you a sense of how the broader market views the stock and where professionals believe it could be headed.

Example prompt:
What do recent analyst price targets and ratings say about Apple’s outlook? The current price of the stock is 249 dollars.

Answer:

Analysts remain cautiously optimistic on Apple’s outlook. The consensus rating across 36 analysts is a Moderate Buy, based on 68 Buy ratings, 34 Hold ratings, and 5 Sell ratings, reflecting broad confidence tempered by some reservations. Their 12-month average price target sits at $255.84, implying roughly a 2.7% upside from the current $249 share price. The most bullish forecasts reach $310, signaling potential upside of 24%, while the most conservative come in at $180, suggesting downside of 27% if pessimistic views prevail.

I find this useful because it gives you perspective, which is very important in investing. However, I don’t base my investing on this. In fact, I often find the best opportunities are when I see something that analysts don’t. Still, perspective is worth paying attention to, because sometimes analysts catch something I might have missed. It is not about agreeing with them, it is about staying aware of how others are viewing the same company.

Before we wrap up, I want to mention something important.

I use ChatGPT for understanding businesses, analyzing risks, and spotting catalysts, but when it comes to financial data, I rely on Perplexity. It pulls in real-time information and the most up-to-date numbers. ChatGPT is incredible for analysis and explanation, while Perplexity is better for precision and current financials.

In another article, I will walk you through exactly how I use Perplexity to research a company’s financials step-by-step.

Conclusion

Artificial intelligence is changing how investors do research. Tools like Perplexity make it faster and easier to understand a company’s financials, competitors, and overall health. The goal is not to replace your own research, but to make you a smarter and more efficient investor.

I use Perplexity to save time, find accurate numbers, and stay up to date. It gives me perspective, but I always pair that with my own judgment. The best investors use every tool available while still thinking for themselves.

AI will not make you a great investor overnight. But if you learn how to use it the right way, it can help you make better decisions, avoid mistakes, and see opportunities before others do.

Happy Wealth Wednesday,

Matt Allen

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