(Reuters) - Shares of Apple jumped 7% on Friday after the tech giant's announcement of a record stock buyback plan and a promising sales growth forecast. This brought back investors who had previously shunned the stock due to concerns over weak demand and increased competition in China.

Late on Thursday, Apple revealed its fiscal third-quarter sales forecast, which exceeded Wall Street's modest expectations. Additionally, the company approved an additional $110 billion in share repurchases, marking the largest ever buyback authorization by a U.S. company, as stated by EPFR analyst Winston Chua.

Following Friday's significant stock gain, Apple's market capitalization rose by nearly $200 billion to reach $2.86 billion, making it the second-most valuable company after Microsoft, which is worth $3 trillion.

This buyback plan would allow Apple to repurchase nearly 4% of its shares, should it choose to execute the full authorization. The company's positive sales forecast indicates its confidence in upcoming product updates, which are set to begin with an iPad event on May 7. These updates are expected to drive demand in Apple's hardware business, following months of sluggish growth that led some investors to question the company's status as a must-own stock.

Analysts at investment platform eToro, such as Josh Gilbert, noted that CEO Tim Cook's reassuring remarks provided relief to investors. Cook's announcement also aligned Apple with other U.S. tech giants that have been actively repurchasing shares or offering dividends to address concerns related to rising investments in generative AI, demonstrating a sense of maturation within the industry.

Danni Hewson, head of financial analysis at AJ Bell, highlighted the importance of growth stocks demonstrating continued growth to satisfy shareholders. She cited Apple as an example, noting that buybacks or dividends can help persuade investors to maintain their faith in a company once its growth begins to slow.

Unlike some of its competitors such as Alphabet and Microsoft, Apple has not experienced a significant surge in costs, largely due to not making substantial AI investments. However, the slow rollout of AI services has been penalized by investors and contributed to the 10% drop in Apple's share price this year.

CEO Cook hinted at the company's future plans, stating that Apple plans to share "some very exciting things." Analysts interpreted this as a signal that Apple might announce AI integrations at its upcoming annual developer conference, which is anticipated to be the largest conference of its kind. Bernstein analysts predicted "a strong iPhone 16 cycle fueled by AI functionality, as well as elongated replacement cycles."

Following these positive developments, at least 13 analysts raised their target price on Apple, pushing up the median view to $200, representing a 15% increase from the stock's last closing price. Currently, Apple's stock is traded at 25 times its 12-month forward earnings estimates, compared to Microsoft's 30.5. Earlier this year, Microsoft overtook Apple as the world's most valuable firm, thanks to its AI efforts.