Is It Too Late to Buy Apple Stock?
Apple (NASDAQ: AAPL) is the most valuable company in the world by market cap, and its business has hit record heights since its founding 47 years ago. The company has had immense success with consumers, achieving leading market shares in many product categories. Its success with the iPhone has attracted more than a billion users and become a valuable tool in drawing consumers to other devices in its lineup.
Apple's potent products have caused its stock to climb over 135,000% since the company went public in December 1980. The company's meteoric rise over the years might suggest the best time to invest in Apple was long ago. However, the company continues to offer consistent gains. Warren Buffett's Berkshire Hathaway regularly increases its stake in the tech giant, most recently loading up on shares in the first quarter of 2023.
The iPhone company has a long history of offering reliable gains and could be an asset to any portfolio. Here's why it's not too late to invest in Apple's stock.
The preferred brand among consumers
Apple isn't always the first to a market, but it has proved particularly skillful at taking existing technology and using its unique design language to attract new users and eventually dominate that industry. The company has done just this with its initial venture into smartphones, tablets, smartwatches, and headphones. Other companies had years leading these markets but lost out once Apple entered the picture.
Consumer preference for its products has been most prevalent during economic challenges over the last year. Reductions in consumer spending on tech have burdened countless companies. According to data from IDC, PC shipments fell 13% year over year in the second quarter of 2023. Market leaders like Lenovo and Dell experienced shipment declines of 18% and 22%. However, the same period saw Apple's MacBook shipments rise 10%.
The company similarly outperformed its peers in smartphones. Counterpoint Research found that smartphone shipments plunged 24% in Q2 2023. Samsung's sales fell 37%, while Apple's decreased a more moderate 6%. Even amid economic strain, consumers strongly preferred Apple's offerings.
Apple has strategically created an interconnected ecosystem for its products that encourages consumers to continue using its devices for the long haul. Meanwhile, exclusive apps like Messages and FaceTime make users think twice before straying to the competition.
Macroeconomic headwinds have challenged Apple this year. However, it will have the most to gain as the market recovers. As a result, it's crucial to keep a long-term perspective with its stock. It continues to boast attractive profit margins, with products at 35% and digital services at 71% as of Q3 2023. The company is in good form and could thrive in the next five to 10 years, thanks to its leading position in tech.
The recent dip in Apple\'s stock price
Apple's stock has dipped 11% since the company posted its Q3 2023 earnings at the beginning of August. The period represented its third consecutive quarter of revenue declines, with revenue falling 1% year over year. The tumble came alongside slips in three of its four product segments as it continued to suffer from consumer pullback.
However, the company's ability to outperform the competition in smartphones and personal computers during the quarter proves its resilience. Meanwhile, it continues to see promising gains in its services business. Apple's services segment grew by 8% year over year in Q3 2023, earning the second-largest portion of the company's revenue at $21 billion.
The digital business includes earnings from subscription-based platforms like Apple TV+ and Music, as well as income from the App Store. These offerings have proved incredibly lucrative for Apple over the years, allowing it to lean less on product sales during uncertain times. And the business is on a path that could see it eventually overtake the iPhone as the highest-earning segment. In fiscal 2022, services reported revenue growth of 14%, double the growth of the iPhone.
If Apple's growth history has taught us anything, it's the importance of buying the dip. The company's stock doesn't often go on sale, and its command of consumer tech and booming services division will likely offer significant gains over the long term. For these reasons, it's not too late to buy Apple stock, and it is an excellent long-term option at its current position.
Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Berkshire Hathaway. The Motley Fool has a disclosure policy.
The Motley Fool is a USA TODAY content partner offering financial news, analysis and commentary designed to help people take control of their financial lives. Its content is produced independently of USA TODAY.
Offer from the Motley Fool:Find out why Apple is one of the 10 best stocks to buy now
Our analyst team has spent more than a decade beating the market. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.
*They just revealed their ten top stock picks for investors to buy right now. Apple is on the list -- but there are nine others you may be overlooking.
Click here to get access to the full list!
*Stock Advisor returns as of September 18, 2023