Recent volatility has sent tech stocks lower. Apple (NASDAQ:AAPL) is no exception. Declines with AAPL stock have been modest compared to more speculative names in the space. Trading for around $160 per share today, it’s down about 10% from its high-water mark. Not exactly a big plunge.
Still, given how market trends are changing, in particular, trends with growth stocks, many investors may be skittish about buying it right now. The near term could remain choppy, with shares treading water or dipping lower.
In addition, fears of slowing growth could weigh on Apple shares as well.
However, the market’s mixed view on Apple may be an opportunity for more long-term minded investors. Certain factors may enable the tech giant to report better-than-expected results in the quarters ahead. Once the tech selloff wraps up, we may see many investors who made a dash to the exits re-enter the stock.
Looking on an even longer time horizon, the iPhone maker’s move into new markets, like electric vehicles (EVs) and the metaverse, could help this stock, its $2.72 trillion market capitalization notwithstanding, leap to even greater heights.
AAPL Stock and the Upcoming Earnings Report
Changes in the market environment have been in the driver’s seat with Apple over the past two months. This week though, something else will be in focus: its latest quarterly earnings report. The analyst community is optimistic. Upping its estimates, the sell-side believes high iPhone demand, plus better-than-expected results for its services business, means the company will report strong results for the December quarter.
But will this help AAPL stock reverse its recent losses? It’s hard to tell. Wall Street may be raising its price targets, yet one analyst (Morgan Stanley’s Katy Huberty) believes the earnings beat is already priced-in. Even if it posts solid results, we may see only a moderately bullish response from investors.
However, a lukewarm reaction to earnings isn’t the worst thing in the world, if you’re looking to buy Apple right now. The market’s cautiousness about tech stocks may work to your advantage. That is, of course, if you’re looking at this as a long-term position.
Apple’s short-term stock performance may continue to hinge mainly on the overall sentiment for tech. Yet the uncertainty/volatility we’re seeing now will in time clear. There are some secondary concerns about its near-term operating performance.
Apple in the Quarters Ahead
Another reservation some may have about AAPL stock (besides the shift in sentiment about tech) is the prospect of a slowdown in its sales and earnings growth. Projections call for more modest boosts to its top and bottom line during FY 2022 (ending September 2022) and FY 2023 (ending September 2023).
After the latest “iPhone super cycle” turbo-charged hardware sales last year, it makes sense there’s this expectation. This too could impact its near-term performance. Whether or not the market warms back up to tech plays.
Or will it? I can think of two factors that may enable Apple to deliver much stronger results than the market currently anticipates.
First, the easing of the supply chain crisis. This could result in stronger-than-expected hardware sales during the second half of FY22. Second, the company’s services segment, which includes its App store, plus platforms like Apple+, could continue to knock it out of the park.
The boost from this may be modest. It may take time for there to be a repeat of this stock’s incredible run during 2020 and 2021. However, there are two long-term catalysts that may help drive Apple’s next big move.
The Bottom Line on AAPL Stock
Since Apple is the largest stock by market cap, it may seem like it has no more worlds to conquer. But new frontiers like EVs and the metaverse are an opportunity for it to level up once again.
The Apple Car, the company’s EV endeavor, could generate $50 billion in annual sales by 2030, according to Piper Sandler’s Harsh Kumar. As the metaverse takes off, sales of augmented reality devices could also become a major business line for the company.
Growth from these emerging areas, coupled with continued strong results from its legacy business (albeit at a slower pace), could continue to make it a solid performer in the years to come.
Earning a “B” rating in my Portfolio Grader, Apple’s next breakout may fall far into the future. Near-term traders may want to look elsewhere. But if your eye is on the long term, and you’re looking for high-quality plays with growth tailwinds? Even if you’re more cautious, you may want to add it to your watchlist.
And if you’re more confident in its long-term prospects? As the market sits on the fence about it, now may be the time to buy AAPL stock.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
Louis Navellier, who has been called “one of the most important money managers of our time,” has broken the silence in this shocking “tell all” video… exposing one of the most shocking events in our country’s history… and the one move every American needs to make today.