Source: PaxForex Premium Analytics Portal, Fundamental Insight
In 2023, Apple's stock surged by a remarkable 40%, solidifying its position as a tech giant with a staggering market capitalization of approximately $2.84 trillion, making it the world's largest company.
Apple undeniably stands as a preeminent player in the technology industry, excelling in both hardware and software. The question, however, is whether the stock remains an intelligent investment at its current price. Let's explore contrasting perspectives on Apple's stock.
The bullish case for Apple stock hinges on its extensive history of designing, manufacturing, and marketing innovative tech hardware that has garnered widespread appreciation. It's this capacity for innovation that is likely to continue driving wealth for Apple shareholders in the years ahead.
The iPhone, iPad, Apple Watch, and AirPods are ubiquitous tech products that have permeated daily life, even for those who don't own them. Sales of these products have propelled Apple's revenue from $171 billion in 2013 to $394 billion in 2022. Apple has ingeniously constructed a family of interconnected products, where each complements the others. For instance, an Apple Watch becomes more valuable when used with an iPhone, and vice versa. This ecosystem-centric approach encourages consumers to stay within Apple's product realm when it's time for an upgrade.
What makes Apple an appealing investment is that it has achieved these milestones while maintaining profitability. Between 2013 and 2022, Apple's operating income surged from $49 billion to $119 billion. Overall, Apple has repeatedly demonstrated its ability to deliver innovative technologies to consumers while concurrently expanding its profitability. Fortunately for investors, the stock can be acquired at a reasonable valuation.
With Apple trading at a forward price-to-earnings ratio of approximately 26, it presents a fair price, especially considering the robust revenue and profit growth mentioned earlier. While it's tempting to seek bargains in the stock market, investing in an exceptional business at a fair price is a sound strategy for long-term wealth accumulation.
Before delving into potential bearish scenarios for Apple stock, it's important to clarify that the stock appears to have a strong likelihood of outperforming the market over the long term. Apple has established an impressive ecosystem of products and services, and it's a formidable profit-generating powerhouse.
However, while Apple has a track record of major innovations, its recent hardware and software releases have primarily been iterative. Particularly concerning the iPhone, which contributes significantly to the company's overall sales and profits, annual hardware updates have focused on incremental improvements in camera technology and additional features in recent years.
The fact that Apple's recent innovations have been relatively modest has not hindered the company from achieving impressive sales figures, thanks to its fiercely loyal customer base. Apple boasts one of the world's most valuable brands and has cultivated a lifestyle around its products. However, with the exception of its AirPods, Apple has not introduced groundbreaking product successes in recent years.
While Apple is gearing up for the launch of augmented reality glasses and is reportedly working on a self-driving smart car and other projects, the success of these new offerings remains uncertain. Notably, the company has yet to make significant strides in the field of artificial intelligence (AI).
Apple's extensive user base provides a strong foundation in the AI space, but it's arguable that the company lags behind Microsoft based on its current efforts. AI has the potential to be a game-changer, and there is a risk that Apple's overall position in the tech industry could weaken if it doesn't make significant progress in its AI initiatives.
Although Apple is undoubtedly a remarkable company that justifies a premium valuation, it has experienced four consecutive quarters of declining sales. Despite its numerous achievements and strengths, Apple still needs to prove its ability to drive stronger growth. If its new product and service initiatives fail to do so, the stock could face challenges or stagnation.
For investors seeking blue-chip technology stocks with a strong industry presence and a robust brand, Apple offers many attractive qualities. The company continues to be highly profitable and boasts a history of successful products and services.
However, it's important not to dismiss the potential short-term risks or the possibility of the stock delivering weaker-than-expected long-term performance. Past successes do not guarantee that Apple will excel in new categories, and the tech giant could encounter disruptive forces in the face of AI trends or face setbacks in its other growth endeavors.
While a buy-and-hold strategy for Apple remains sensible for most investors, it's prudent to thoroughly consider and evaluate bearish scenarios before making significant investments in the stock.
As long as the price is above 173.00, follow the recommendations below:
- Time frame: D1
- Recommendation: long position
- Entry point: 184.12
- Take Profit 1: 190.00
- Take Profit 2: 196.00
Alternative scenario:
If the level of 173.00 is broken-down , follow the recommendations below:
- Time frame: D1
- Recommendation: short position
- Entry point: 173.00
- Take Profit 1: 167.00
- Take Profit 2: 161.00
