Analysts are forecasting earnings per share increases of nearly 9% for this fiscal year and about 6% for 2023, respectable returns for a company as large as Apple. The tech giant is expected to generate $392.5 billion in sales this year and Apple is the world’s most valuable company, with a market capitalization of $2.5 trillion.
The company generates a huge amount of money from a new line of iPhones as existing customers upgrade and some holdouts make the switch from Android devices. Apple also rakes in big bucks from its lucrative services unit, subscriptions for iCloud, Apple Music, Apple TV+ and other perks for iPhone, iPad and Mac users.
“All the hoopla around the iPhone 14 upgrade cycle should help Apple in the short-term,” said Jordan Kahn, chief investment officer of ACM Funds. Kahn owns Apple in the ACM Dynamic Opportunity Fund.
Wedbush Securities analyst Daniel Ives noted in a report that Apple’s initial order for 90 million iPhone 14 units is roughly flat compared to what it had ordered for the iPhone 13, even with “macro storm clouds building.” So Apple clearly still expects its devices to sell even as consumer spending slows more broadly.
“This speaks to the underlying demand story that Apple anticipates for this next iPhone release with our estimates that 240 million of 1 billion iPhone users worldwide have not upgraded their phones in over 3.5 years,” Ives added.
Apple also benefits from the fact that it is a stock that is loved not just by individual investors but also by the giants of Wall Street.
Apple is that rare beast, a stock that still is exciting enough for the growth crowd but is also attractive to value investors thanks to its reasonable price, penchant for stock buybacks to boost earnings and a steadily growing dividend.