As the largest company in the world, Apple (NASDAQ:AAPL) isn’t the sort of company that you’d expect to have a big breakout in 2021. After all, it’s already so big and so huge that it takes a lot to move the needle on AAPL stock.
But make no mistake. That’s exactly what will happen in 2021.
AAPL stock will have a huge breakout higher because everything at Apple — from its core hardware business to its ancillary but burgeoning software business — will fire on all cylinders over the next 12 months. As it does, Apple will report of a series of record-breaking blowout earnings report throughout 2021, the sum of which will spark a big rally in AAPL stock.
Buy AAPL stock today and hold for a big 2021 surge.
Here’s a deeper look.
The Hardware Business Will Boom in 2021
Apple’s core hardware business will boom in 2021, paced by the company’s biggest iPhone launch in a decade.
Specifically, Apple just announced its brand-new iPhone 12, otherwise known for its most distinguishing feature from previous models as the “5G iPhone”. That’s right. This is the first iPhone which will allow consumers to harness the breakthrough speed and power of 5G wireless connectivity in their smartphones, and to that end, easily projects as one of the best-selling iPhone models, ever, especially since not many consumers have upgraded their iPhones in recent years.
Pent-up demand plus a significant technological upgrade is a recipe for enormous iPhone 12 sales in 2021. Indeed, that’s already happening. First day iPhone 12 preorders measured 2 million units, up more than 100% from last year.
Meanwhile, the PC market is currently booming thanks to work-form-home and learn-from-home trends, and as hybrid work/education environments increasingly become the norm in 2021, this PC boom will persist and Apple will sell a lot of Mac computers and iPads to information workers and students.
Apple also recently launched a new, low-price Apple Watch SE that will bring many first-time smartwatch buyers into the market — you know, people who have always been interested in smartwatches but didn’t want to spend $400 on one.
Plus, new AirPod models are coming in early 2021, and considering how much of a hit the first iteration of AirPods were, it’s plausible to think this new generation of AirPods will be a big hit.
All in all, the outlook for Apple’s hardware business in 2021 is exceptionally robust. Of course, that’s great news for AAPL stock.
Software Services Will Boom, Too
Apple’s hardware business won’t be alone in 2021. The company’s software business will boom next year, too.
The new Apple One bundle is a perfect way for the company to create an economic, all-in-one subscription service package that should see strong uptake over the next few quarters and dramatically grow Apple’s DTC footprint.
Apple TV+ is a big winner of that bundle, because it will entice current Apple Music users to buy the bundle which includes Apple Music and Apple TV+, leading to a surge in TV+ viewers. That creates a positive growth flywheel, because the more people watch Apple TV+ shows, the more people talk about them, and the more other people want to watch them (which should, of course, lead to more sign-ups).
Apple Fitness+ is a great new service built for a world where there’s a ton of demand of high-quality, at-home workout videos and platforms. Early adoption of this platform should be very strong in late 2020 and early 2021. Apple Music TV is another great new service which should see demand tick higher in 2021 as consumers stuck at home spend more and more time watching digital content.
An under-the-radar development here is also the emergence of social commerce. Facebook (NASDAQ:FB) and other social media platforms are aggressively building out in-app commerce capabilities to create a new era of social commerce wherein consumers buy-and-sell stuff in social media apps. As the software platform which hosts all these social media apps, Apple will take a commission off all these sales and transactions.
Therefore, as social commerce increasingly becomes a “thing” in 2021, Apple stands to make a lot of high-margin revenue through transaction commissions.
All in all, much like the hardware business, Apple’s software business projects to have a blockbuster 2021. Because this business carries higher margins than the hardware business, the software business firing on all cylinders is much more important when it comes to AAPL stock.
Bottom Line on AAPL Stock
Apple stock is a long-term winner. I don’t need to tell you that. But it’s worth noting that this company’s hardware and software businesses are both going to fire on all cylinders in 2021 — a dynamic which implies that the sky is the limit for AAPL stock over the next 12 months.
So … buy AAPL stock on weakness in late 2020 on transient stimulus, election and Covid-19 headwinds. Hold through the turbulence. And let powerful fundamentals drive this stock way higher in 2021.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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