Investment Reflection: AAPL Stock (September 20, 2024)
My additional investment in Apple (AAPL) $Apple(AAPL)$
Revenue Growth Set to Accelerate
Apple is on track to generate $390 billion in revenue for the current fiscal year, representing a modest 2% increase from fiscal 2023. However, fiscal 2025 estimates forecast a more robust 8% growth, indicating the company is entering a period of accelerated revenue generation. Given Apple's massive existing customer base and its ability to introduce cutting-edge technology, including the potential of generative AI, I believe this growth will not only be sustained but could also surpass expectations.
Earnings Growth: A Key Catalyst
The revenue growth is expected to translate into even stronger earnings growth. With a projected 9% earnings improvement in fiscal 2024, followed by further acceleration over the next two years, Apple's earnings per share (EPS) could rise from $6.13 in fiscal 2023 to $8.39 in fiscal 2026. This earnings growth, combined with a reasonable price-to-earnings (P/E) multiple of 33, suggests a potential stock price of $277 by 2026—an impressive 28% upside from current levels.
However, I believe there's room for even greater gains. Currently, Apple trades at a discount to the broader U.S. technology sector's P/E ratio of 44. If the market begins to reward Apple’s investments in AI and generative technologies more generously, we could see the stock's multiple expand, further boosting its stock price potential. Given that Apple is positioning itself as a leader in AI-powered smartphones, its future earnings potential may exceed current forecasts.
AI and Innovation: Apple’s Next Growth Engine
Apple's ability to capitalize on AI presents a significant opportunity. With a massive installed base of users worldwide, Apple is well-placed to leverage AI to enhance its product offerings and drive future growth. The anticipated integration of generative AI into its ecosystem—particularly into its smartphones—could unlock new revenue streams and increase customer loyalty. As AI adoption in mobile technology grows, Apple’s strong brand and loyal customer base will likely provide a competitive advantage in monetizing AI-driven innovations.
Long-Term Strategy: A Buy-and-Hold Approach
Apple’s combination of solid earnings growth, expanding revenue opportunities through AI, and a valuation that could potentially increase makes it a compelling long-term investment. While the stock may not be trading at a significant discount, its growth prospects, particularly in the AI space, make it worth holding onto for the foreseeable future.
In a nutshell, my additional investment in Apple reflects confidence in the company's continued innovation, expanding revenue base, and the potential for significant upside as it leverages AI to fuel future growth. Apple's strong financial foundation, combined with its capacity for delivering both product innovation and earnings growth, makes it a core holding in any growth-focused portfolio.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
