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Apple’s Potential for a Breakout Year in 2024 Apple’s Potential for a Breakout Year in 2024

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Apple’s (NASDAQ:AAPL) recent share price weakness presents an intriguing opportunity for investors to consider a long position in the iconic consumer electronics company. Despite a recent downgrade citing iPhone weakness as a potential impediment to Apple’s valuation growth, research firm Gartner’s forecast of a surge in chip demand in the coming year suggests a possible recovery in the consumer electronics industry. Given that Apple still derives nearly 80% of its revenues from hardware-related sales, a revival in device shipments could serve as a significant catalyst for the company’s growth. Could 2024 be a year of resurgence for Apple and the broader consumer electronics sector? The signs are pointing in that direction.

Data by YCharts

Data by YCharts

Apple’s Promising 2024 Outlook

The equity research provided by Jones indicates that Apple’s stock is undervalued and has significant potential for appreciation in 2024. The analysis suggests that Apple stock is poised to reach a fair value of ~$214 based on a 30X P/E ratio, conditional on the rebound of the device market and improvements in consumer sentiment.

Data by YCharts

Risks to Apple’s Bright Prospects

Contrary to earlier projections, the U.S. economy did not succumb to a recession in 2023. A survey conducted by the National Association for Business Economics revealed that the probability of a recession in 2024 is estimated at 50% or lower by three in four respondents.

The Federal Reserve’s indication of a lower federal fund rate in 2024 implies a potential soft landing. These favorable economic conditions bode well for a recovery in the consumer electronics market. However, failure of this optimistic economic outlook could pose severe challenges for Apple, a company heavily reliant on consumer spending for its electronics segment.

Closing Perspective on Apple’s 2024

If consumer spending remains robust and the U.S. manages to avert a recession, 2024 is anticipated to be a breakthrough year for Apple. Hardware-related segments are expected to witness growth catalysts as consumers allocate more funds to new consumer electronics and crucial IT equipment upgrades. Reduced inflation should also provide consumers with financial relief, potentially leading to increased consumer spending. With an accommodative stance by the Federal Reserve and optimistic Gartner projections for the device market, Apple, bolstered by its hardware-related revenues, stands to benefit significantly from the anticipated rebound in device sales throughout 2024.

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