Apple’s Financial Fortunes: Should Investors Jump In Now?
The largest companies in the world have consistently demonstrated their ability to grow earnings and deliver strong stock performance. Their resilience in competitive markets suggests a positive outlook for future success. According to research from Motley Fool, nearly all of these giants have achieved five-year annualized returns in the double digits, rewarding long-term investors considerably.
Tech Dominance Among Giants
Currently, roughly half of the 20 largest companies operate in the technology sector, with specialties ranging from artificial intelligence (AI) chips to social media and smartphones. Leading this charge is Apple (NASDAQ: AAPL), recognized as the biggest company by market value, standing at $3.68 trillion as of January 6. Following closely behind is Nvidia at $3.54 trillion. Apple made history as the first business to hit market capitalizations of $1 trillion, $2 trillion, and $3 trillion.
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Founded in 1976, Apple has transformed into a consumer electronics and services giant that generates billions in earnings each year. The stock has skyrocketed more than 184,000% since it first went public in 1980. This raises an important question: Is it wise to invest in Apple now, or is it too late? Let’s explore.
Image source: Getty Images.
Understanding Apple’s Competitive Edge
Apple is known for its iconic products, including the well-loved iPhone, Mac, and iPad. Its innovation and customer loyalty play crucial roles in its ongoing success. Customers often wait eagerly for the latest iPhone instead of opting for cheaper alternatives. This strong competitive advantage, or “moat,” has significantly contributed to Apple’s earnings growth over time.
As of now, Apple’s gross profit for the trailing twelve months exceeds $180 billion, with total revenue surpassing $390 billion.
AAPL Gross Profit (TTM) data by YCharts
The strength of Apple’s earnings has led to impressive returns, with a five-year annualized return exceeding 27%. The stock increased by 30% last year, contributing to gains across major market indices: the Nasdaq, S&P 500, and Dow Jones Industrial Average.
Considering its long history, one might question whether Apple has already seen its greatest growth. While it’s true that younger companies, or firms like Nvidia at the forefront of the AI boom, may exhibit faster growth, Apple’s established market dominance and recent AI ventures could signal a promising new growth phase on the horizon.
Exploring New Revenue Opportunities
With over 2.2 billion products installed worldwide, Apple has identified significant new revenue opportunities through its services. The company offers a range of services, from digital content to cloud storage, resulting in record service revenue in recent quarters.
Moreover, Apple is enhancing its product line with the introduction of its AI offering, Apple Intelligence, which aims to enrich user experiences across its devices, further solidifying customer loyalty.
So, is it time to invest in Apple’s stock? It ultimately depends on your investment strategy. If you’re an aggressive investor seeking explosive growth, other options might be more appealing. However, for the average investor, Apple remains a strong buy, bolstered by its competitive moat and exciting prospects in services and AI, potentially fueling future growth.
Don’t Miss Out on This Investment Opportunity
Wondering if you’ve missed your chance to buy into successful stocks? You won’t want to overlook this alert.
Occasionally, our team of expert analysts issues a “Double Down” stock recommendation for companies poised for significant growth. If you’re concerned about missing an investment opportunity, now is the time to act before the window closes. The numbers reveal the potential:
- Nvidia: invest $1,000 when we doubled down in 2009, you’d have $345,467!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $44,391!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $453,161!*
At this moment, we’re issuing “Double Down” alerts for three exceptional companies, and this opportunity may be rare.
See 3 “Double Down” stocks »
*Stock Advisor returns as of January 13, 2025
Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple and Nvidia. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
