Apple Stocks Outshine Meta, Amazon, and Other Big Tech Firms

Amidst all the gloom, experts make a positive forecast for Apple. What makes Apple stock a buyer's choice?

With labor unrest raging wild resulting in production halts at Foxconn Technology Group's iPhone plant in central China, it witnessed a slump in sales. The company lost millions of dollars during the holiday season. As recession is lurking in the corner, it is predicted that Apple may further lose its sales due to reduced purchasing power among consumers. That apart it has lost almost 800 million dollars after Fed Bank raised interest rates. Further, with its App Store practices, such as allowing apps from other sources on its devices, coming under strict scrutiny, Apple stock has lost a significant value. This step might encourage other major countries like the US to take similar steps. But the experts, amidst all the gloom, make a positive Apple stock forecast. So, what makes Apple stock a buyer's option?

Apple, as per the Stock Recover report, has been doing better than its other four counterparts, Amazon, Google, Meta, and Microsoft. As per the report, they have together returned a negative return of about 43% in 2022, while Apple has only lost 19%, a comparatively modest figure. Approximately, the gap between Apple stock and the rest of the big-tech stock is significant 25 percentage points. Given that NASDAQ lost 29% loss YTD, Apple turns out to be a reasonably performing stock.

There are many reasons Apple makes for a leading player. Its market capitalization is pegged at more than $2.7 trillion. And with $454 billion cash flow from operations, it was expected from a company like Apple to go for acquisitions. However, it turned its profits into shareholder dividends and buybacks. "Apple could have done all the things that the bankers wanted them to do—buy Netflix, buy Disney," says Kimberly Forrest, founder, and chief investment officer at Bokeh Capital Partners LLC, an asset management company that owns Apple shares. "Instead, they've been disciplined and returned shareholder capital, and they've been rewarded for it."

The reason for Apple's stability goes beyond its balance sheets. Its strong market presence with a loyal customer base puts its future projections in an optimistic frame. Its 2023 earning estimates have been declining but even then, Wall Street analysts predict a 2% increase in its profits, while combined earnings of tech companies are estimated to fall by 2% for the same period. Apple's opportunity lies also in its product design, production, and marketing. According to Counterpoint's Market Monitor Service, the global handset market revenue dropped by 3% YoY in Q3 2022. Apple could tide over it by launching the new iPhone 14 series and achieve 10% YoY revenue growth and 7% average selling price (ASP) growth in Q3 2022. iOS, according to what experts say is a 'sticky platform'. The people once get hang of iOS devices, generally wouldn't abandon them for other devices. Apple also benefits from the fact that its affluent category of customers will keep buying iPhones even during the recession, says Benowitz. However, Apple has its breed of critics. Michael Lippert, vice president, and portfolio manager at the Baron Opportunity Fund, doesn't buy into its invincibility as he believes Apple has not progressed much in terms of novel innovations. "When was the last time, seriously, they've made an amazing innovation since the iPhone? It only gets slightly better", he says. But for the appended services it offers such as cloud storage, apps, etc., even the minuscule share of the device market it has, will hold its ground.