Apple Stock: Buy, Sell, or Hold?
Written by Leo Sun for The Motley Fool -> Apple 's (NASDAQ: AAPL) stock recently hit an all-time high after it unveiled Apple Intelligence, its closely watched expansion into the generative artificial intelligence (AI) market. The sprawling update will add AI-powered tools to wr
Apple 's (NASDAQ: AAPL) stock recently hit an all-time high after it unveiled Apple Intelligence, its closely watched expansion into the generative artificial intelligence (AI) market. The sprawling update will add AI-powered tools to write, edit, and summarize messages; search photos and videos; and create images from circled text and typed prompts. It will also integrate OpenAI's ChatGPT into Siri and its other iOS, iPadOS, and MacOS applications.
All of those new features could tighten Apple's grip on its customers and help it keep pace with its big tech peers in the artificial intelligence ( AI ) race, but will they actually move the needle for the company and drive its stock even higher?
Let's take a closer look at Apple and see if it's the right time to buy, sell, or hold its high-flying stock.
In its latest quarter, Apple generated 51% of its revenue from the iPhone and 26% from its services, which include the App Store, iCloud, and subscription-based services. The remaining 23% came from its Mac, iPad, and wearables, home, and accessories divisions. Here's how those core businesses fared over the past two and half fiscal years.
Data source: Apple. Fiscal year (FY) ends in September. YOY = year over year.
Apple's sales of iPhones declined as the 5G upgrade cycle ended and it faced stiff macro and competitive headwinds in China. Its Mac sales tumbled in a post-pandemic market, and its iPad sales withered due to longer upgrade cycles and a lack of compelling new features in its latest models. The strong dollar exacerbated that slowdown over the past two years.
The only consistent bright spot for Apple has been its services business, which served over a billion paid subscribers at the end of the second quarter of fiscal 2024. That's more than double the number of subscribers it had four years ago. It's been relying heavily on the expansion of that ecosystem to lock more customers into its hardware devices.
Apple's iPhone sales still slipped in the first half of fiscal 2024, but most of that decline can be attributed to currency headwinds. Its services growth is accelerating again and its Mac sales are finally stabilizing, but its iPad sales are still slipping. Analysts expect Apple's revenue and earnings to increase only 1% and 7%, respectively, for the full year.
