This year has not been easy apple (NASDAQ:AAPL). The iPhone maker faced several headwinds, including antitrust lawsuits and weak sales of its most important device in China. Still, Apple’s stock performance in 2024 wasn’t terrible. The company’s stock has risen 20% since the beginning of the year, barely trailing its stock price. S&P500. How will Apple perform through the end of the year and beyond? The company’s next quarterly update will be on October 31st, and things could change in some direction.
Find out if Apple stock is worth buying before then.
Is Apple Intelligence effective?
One reason for Apple’s lackluster performance in the first half of this year was that investors and analysts saw the company lagging behind similar technology leaders in the critical artificial intelligence (AI) industry. That’s true. However, the company never aimed to be the first to market. Apple has typically found ways to put its own creative spin on existing products and services to attract customers. In June, the company finally announced how it will integrate AI into its business.
Apple announced Apple Intelligence, a suite of AI-related services available on select devices. These features are only for users of some devices, such as the latest versions of the company’s smartphones, the iPhone 15 Pro, iPhone 16, and various new versions of other well-known brands. Most of these features have not yet been released. It is expected to be released (in a somewhat limited capacity) later this month. However, in Apple’s next earnings report (FY2024 Q4), it will be interesting to see how much iPhone sales have grown compared to the past few quarters.
For the nine months ended June 29, iPhone sales fell 1.2% year over year to $155 billion. If they’re moving in the right direction by a significant margin, that’s a clue that people are buying what Apple is selling, at least the version of the iPhone that has Apple Intelligence available. It might become. As a result, the company could experience a robust renewal cycle, driving iPhone sales and overall revenue growth.
It also has the potential to attract new customers to Apple’s ecosystem. The company’s installed base of devices exceeds 2.2 billion, hitting new all-time highs across a variety of gadgets and in most regions during the latest period. Growing Apple’s installed base is essential to the company’s future, as it drives revenue growth in its high-margin services division. The more people participate in that ecosystem, the more money you can squeeze out of it.
Apple could also benefit from future quarterly updates if they simply outperform sales and profits. If it can do so while also showing that it’s starting an exciting renewal cycle thanks to Apple Intelligence and growing its installed base at the same time, its share will almost certainly jump.
I have a better question
It’s difficult to predict what will happen. Those who are buying Apple stock now expecting the stock to rise following its quarterly updates may or may not be disappointed. So for anyone considering investing today, the better question is whether Apple can still deliver solid returns over the long term, regardless of what happens on October 31st. In my view, the tech giants can still do that.
Apple’s most important assets are its innovative capabilities and large and growing user ecosystem. The former allows you to identify and successfully pursue new growth opportunities, while the latter provides tremendous monetization opportunities while increasing profits and revenues over the long term. There are many other reasons why this business remains an attractive long-term opportunity. Apple’s brand name, one of the most powerful in the world, gives it a strong competitive advantage, and the company is a decently profitable company.
Admittedly, the company’s forward dividend yield of 0.44% isn’t surprising. The S&P 500 average is 1.32%. However, the tech giant has increased its dividend by almost 113% over the past decade and boasts a low (perhaps too low) cash payout ratio of 14.56%. There is plenty of room for further dividend increases. Between Apple’s dividend and growth opportunities, there are plenty of reasons for long-term investors to buy the company’s stock now. Don’t get too excited about the quarterly updates Apple releases in the future.
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Prosper Junior Bakinny has no position in any stocks mentioned. The Motley Fool has a position in and recommends Apple. The Motley Fool has a disclosure policy.
Should you buy Apple stock before October 31st? Originally published by The Motley Fool
