Founded in 1993, The Motley Fool is a financial services company dedicated to making the world smarter, happier, and richer. The Motley Fool reaches millions of people every month through our premium investing solutions, free guidance and market analysis on Fool.com, top-rated podcasts, and non-profit The Motley Fool Foundation. Apple could become more than just a seller of smartphones and tablets. Additionally, its services business could also spike big-time with the addition of metaverse-related devices such as a headset that could help it sell more applications. Sales of 5G devices are expected to jump from $105 billion last year to nearly $664 billion in 2030.
Speaking about AI investments and research and development spending, CFO Luca Maestri — who was on his final earnings call for Apple before transitioning to a new role— said that Apple had been investing heavily in R&D over the past several years. The company had also reallocated some of its internal resources toward AI, he added. Cook declined to comment on the election on an earnings call with analysts.
AAPL vs Consumer Electronic Stocks
Services carry a fantastic gross margin of 74.6%, much higher than the products’ 36.6%. As more revenue comes from services, Apple’s profitability could get a boost. There’s the iPad, Mac computers, AirPods, and Watch that consumers seem to love. Rumors were swirling for the longest time that the business would eventually introduce an electric vehicle.
Apple says it’s “very happy” when asked about services.
As such, don’t be surprised to see the iPhone return to growth thanks to the AI revolution, which probably explains why analysts are expecting an uptick in its bottom-line growth. However, a closer look at Apple’s potential catalysts indicates that the tech giant could How to buy cat girl coin turn out to be a solid investment over the next five years as well. Neil Patel and his clients have no position in any of the stocks mentioned. A high valuation, coupled with muted growth prospects, creates a terrible recipe for investors looking at Apple stock. Whether it’s mastering cutting-edge strategies, uncovering actionable investment opportunities from influential leaders, or breaking down complex topics, our in-depth journalism has you covered. Become a Forbes member and gain unlimited access to bold ideas shaking up industries, expert guides and practical investment advice that keeps you ahead of the market.
Analyst reacts: Apple showing ‘resilience’ amid market headwinds.
According to Wall Street consensus analyst estimates, the business is expected to increase sales by just 5% per year between fiscal 2023 and fiscal 2026. According to 33 analysts, the average rating for AAPL stock is “Buy.” The 12-month stock price forecast is $239.78, which is an increase of 4.31% from the latest price. And this was not the only reason why investors cheered Apple’s report. The company increased its quarterly dividend by 4% to $0.25 per share. Additionally, Apple announced a share repurchase authorization worth a whopping $110 billion, the largest in an introduction to fundamental analysis in forex U.S. history. Moreover, positive management commentary about the company’s prospects and CEO Tim Cook’s comments that Apple is investing in generative AI seem to have bolstered investor sentiment further.
- This is a central part of the company’s future growth, as it provides a second juggernaut business line that makes up for potential cyclicality that has crept into the hardware segment as the company’s products are now so widely owned.
- Assuming it continues to trade at 28 times earnings in five years and achieves $10.33 in earnings at the end of the forecast period, its stock price could jump to $289.
- “In terms of the demand curve, what we believe is that it’s a compelling reason for upgrading,” Cook says.
- Cook declined to comment on the election on an earnings call with analysts.
- The Motley Fool has positions in and recommends Apple and Berkshire Hathaway.
As the following chart indicates, the tech giant’s earnings growth is expected to gain momentum in the current fiscal year and get stronger over the next couple of years. “Safe” and “stock market investing” are two things that simply do not overlap. That is evidenced by the fact that this leading company’s stock has suffered numerous 50% drawdowns in its history, including an 81% peak-to-trough decline. The last big test for the broad stock market was in 2022, when the S&P 500 index fell 18%.
These features should help encourage Apple’s user base to upgrade to its upcoming iPhones ADSS forex broker and also allow the company to make a dent in the fast-growing AI smartphone space. Those services have become increasingly important to Apple’s financial situation. However, moving forward, the bulls hope that artificial intelligence (AI) can play a bigger role. Apple wants to harness this technology to make its hardware products, particularly the iPhone, even more useful for consumers. After services sales rose 14.2% in Q2, they accounted for 26.3% of the company’s total.
So investors looking to add a dividend-paying tech stock to their portfolios would do well to buy Apple right away, as it seems set to deliver healthy gains over the next five years. The average analyst rating for Apple stock from 33 stock analysts is “Buy”. This means that analysts believe this stock is likely to outperform the market over the next twelve months.
With $25 billion in service segment revenue in the most recent quarter, this continues to be a driver for Apple. This includes iTunes, digital content, AppleCare, Apple Pay and licensing segments. This is a central part of the company’s future growth, as it provides a second juggernaut business line that makes up for potential cyclicality that has crept into the hardware segment as the company’s products are now so widely owned.