Among tech stocks this earnings season, it’s been a mixed bag. While some tech stocks have surged after earnings, others, like Apple (NASDAQ:AAPL) stock have pulled back following the release of their latest quarterly results.
Sure, the post-earnings decline for AAPL stock hasn’t been all that severe. Shares in the tech giant have only declined by a few percentage points.
However, despite some bright spots in this overall-mixed earnings release (such as the performance of one of its units that will likely drive future growth), you may think this is the beginning of the end to AAPL’s hot run during 2023.
While it’s not for certain whether this FAANG component will keep falling, or start to pick back up, in the immediate term, if you are a long-term investor, it’s best to view this latest move as merely market noise. Why? Let’s take a closer look, and find out.
AAPL Stock Results and the Market’s Reaction
Post-market on Aug. 3, Apple released results for its fiscal third quarter (ending July 1, 2023). During the period, the company reported revenue of $81.8 billion, and earnings of $1.26 per share.
Although both these figures declined on a year-over-year basis, and revenue came in only a few million below analyst estimates, earnings did beat expectations.
Like I hinted above, there was a positive takeaway with the latest results from one of Apple’s high-potential business units.
That would be the company’s Services unit. Last quarter, Services revenue grew by 8%, suggesting that a growth resurgence with this high-margin segment may be starting to take shape.
Again, based on the post-earnings price performance of AAPL stock, investors are seemingly focused more on the negatives than the positives. Admittedly, iPhone, Mac, and iPad sales did decline compared to the prior year’s quarter.
The tech slump clearly keeps weighing on results. Based on updated guidance, this is expected to continue during this quarter (ending September 2023).
Yet while the earnings release has, and could continue, to dampen sentiment for AAPL in the near-term, this isn’t a reason to jump ship. Rather, it’s good news for long-term investors.
The Weakness You’ve Been Waiting For
From January through the start of August, AAPL stock experienced a moderately steep climb to higher prices. Although plenty hopped aboard this bandwagon, it’s possible you skipped out on initiating or adding to an Apple position on concerns this run-up was not sustainable.
However, the opportunity for more valuation-conscious investors to dive may be just around the corner. How so? The market could continue to absorb the prospect of continued soft demand for Apple’s hardware products.
Bearish updates to analyst ratings aren’t helping, and may place more pressure on AAPL. All of this could lead to a moderate price decline for shares in the near-term.
That’s not to say Apple will fall all the way back to $125 per share, but a retreat to between $150 and $175 per share isn’t out of the question. If this happens, consider it high time to pounce.
For those who have yet to buy, such price levels are a solid entry point. If you already own this stock, this is also a solid price point for increasing your exposure.
Mostly, because the factors that make AAPL (in my view) one of the best “buy and hold” stocks out there, have not gone away.
Bottom Line: Seize the Opportunity
Going into earnings, it wasn’t unknown that Apple is experiencing demand challenges. It wasn’t unknown either, that this challenge could carry on throughout the rest of the fiscal year (ending September 2023).
However, to say “it’s all downhill from here” isn’t a hyperbolic statement. Based on sell-side earnings forecasts, Apple remains poised to report improved earnings starting next fiscal year.
As I have argued previously, in the longer-term, expansion of the iPhone’s presence in emerging markets like India, plus the continued growth of its Services unit, alongside some of the company’s chancier wagers (like the metaverse or self-driving cars) paying off, means continued strong growth.
For those who decide to seize the opportunity if it arises (i.e. if shares moderately correct), strong returns over a multi-year time frame could be your reward for staying the course with AAPL stock.
AAPL stock earns a B rating in Portfolio Grader.
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.
