Call it a rite of passage. Apple (NASDAQ:AAPL) announces the release of its latest iPhone and the stock goes nowhere. Or in some cases, AAPL stock even drops after the announcement. Call it being a victim of elevated expectations. When you’re an icon, critics are quick to say “is that all you got?”
A similar story is playing out with the release of the iPhone 12. Analysts are greeting the newest, and first 5G iPhone with a dose of skepticism. On the one hand, I can understand it. Apple closed its operations in Wuhan, China, at the initial outbreak of the novel coronavirus pandemic. There was some concern as to whether the company would be able to deliver the iPhone 12 in 2020.
So it’s no surprise that analysts are looking for any reason to pick apart the iPhone 12 as not being enough. It may not be. Time will tell. But history suggests that betting on less than robust iPhone sales is usually a losing bet. Last year’s iPhone 11 is a great example of that. And that was a phone without 5G.
However, I’m not making an original case for buying AAPL stock when I suggest you look beyond the iPhone. But it bears repeating. Some investors will focus only on the iPhone 12 sales numbers. But there’s a bigger story playing out.
Apple Is More Than the iPhone
As successful as I believe the iPhone 12 will be, even Apple has made a strategic pivot. That pivot is not moving the company away from the iPhone. But it is positioning the company to become less dependent on the revenue from that single device.
The services division of the company has been growing for several quarters now. But what should have investors really excited is the continued growth of its wearables division. This division is growing at a rate of almost 9% sequentially and approximately 35% year-over-year since 2017.
And when you talk about wearables, it’s becoming hard to ignore the Apple Watch. Although the company doesn’t break out specific revenue numbers for the Apple Watch (yet), there is no question it’s becoming a big part of Apple’s ecosystem.
One reason I know that is advertising. I’m not a huge TV viewer, but even in my limited viewing time, I’m seeing commercials for the Apple Watch, not the iPhone. And the message of these ads is simple, the Apple Watch is about more than keeping time, it’s about your health.
Apple Health Care Anyone?
Apple is making bold moves to integrate its products into the healthcare sector. And the Apple Watch is a big part of that. The device already has features that have required approval by the U.S. Food & Drug Administration. In fact, Apple is taking creative measures to avoid having the Apple Watch declared as a medical device. That would put it under much closer scrutiny from the FDA.
But Apple’s healthcare push includes more than the Apple Watch. The company also has software and services that promote the user’s health and wellness. And with partnerships the company is forming, it’s clear that Apple wants to be a major player in managing health and wellness.
Buy AAPL Stock And Enjoy the Holidays
I hope you enjoy the holidays whether you decide to buy AAPL stock or not. But an investment in Apple today is an opportunity that is sure to bring you cheer for years to come. The iPhone is their first foray into 5G technology. And by the time 2021 rolls around, investors will have a better idea of how iPhone 12 sales are doing (I’ll take the over).
But as Matt McCall wrote about 5G, you have to look at where the technology is headed. Apple certainly seems to be paying attention to that. And that’s why AAPL stock is a buy. Because they’re not just getting 5G devices ready, but making inroads to be a critical part of wherever the 5G infrastructure goes next.
On the date of publication Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Chris Markoch is a freelance financial copywriter who has been covering the market for over six years. He has been writing for Investor Place since 2019.
