Among the tech stocks driving significant growth in the market, Apple stands out as a solid performer. Despite the attention Nvidia has been garnering recently, many other stocks, like Apple, have been consistently outperforming the broader market.
Investors who placed their faith in Apple back in June 2014 and invested just $1,000 would be smiling today. According to data from Morningstar Direct, that investment would have grown to over $10,460 by Tuesday’s closing price of around $209. This represents a cumulative growth of over 946% and an annualized return of 26.46%.
Although these numbers may not be as explosive as recent Nvidia growth figures, they still outstrip the S&P 500’s performance over the same period. Even more impressive, if you were one of the fortunate ones to invest in Apple at its inception in 1980, that initial $1,000 investment would be worth over $2.1 million today, an annualized return of 19.22%.
Apple: A Key Player in Tech Stocks
Apple, along with Alphabet, Amazon, Microsoft, Meta, Nvidia, and Tesla, was a major contributor to the stock market’s rise to new heights in 2023 and continuing into 2024. Despite being one of the slower performers in this group in recent months, with only a 1% rise in earnings in the last quarter and a decline in sales, Apple remains an attractive investment.
‘Significant Innovation’
Bank of America continues to rate Apple as a buy. A research note published this week highlighted the tech giant’s recent introduction of AI capabilities, known as Apple Intelligence, and its decision to give third-party developers access to more AI features as factors that “should drive significant innovation from developers.”
Bank of America’s Wamsi Mohan notes that “conversational AI with context and privacy” will be crucial for monetizing Apple’s installed device base over time. This could lead to increased productivity, higher-priced apps, and increased subscriptions and payments from partners.
According to Mohan, potential catalysts for Apple’s growth include consumers upgrading their iPhones to access new AI features and the company’s ability to expand its services and other offerings. In an ideal scenario, existing customers will upgrade their phones and iPads to access the AI, and those loyal to other operating systems may switch to Apple.
Potential Challenges
However, a few potential challenges could dampen Apple’s growth. A general slowdown in consumer spending could impact the company, leading to weaker iPhone 15 sales, and longer iPhone replacement cycles. There’s also a chance customers may not be interested in Apple Intelligence features, leading to a cooling off of demand after initial interest. In addition, Mohan points to two ongoing antitrust cases in the U.S. that could negatively affect the company.
Worth noting is the fact that because the S&P 500 is weighted by market cap, the movements of companies like Apple and the rest of the Magnificent Seven—either up or down—can have an outsized impact. Some analysts and financial advisors warn that these tech giants could be overvalued, which could impact retail investors who are increasingly investing in index funds.
