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Apple Stock: New Tech Could Propel Growth
Stock Analysis & Ideas

Apple Stock: New Tech Could Propel Growth

Investors weren’t too enthused when it came to the latest Apple (AAPL) keynote, which unveiled a brand new Mac with the M1 Ultra, a refreshed budget iPhone SE, an iPad Air with new guts (the incredibly-fast M1 chip), and the inclusion of MLB Friday Night Baseball as a part of Apple TV+. 

There was a lot to digest, but it wasn’t enough to move the needle higher on Apple stock amid its painful correction. Shares ultimately ended the day 1.2% lower.

While the event was really nothing for most investors and analysts to write home about upon first glance, I think the reveal paints a prettier picture for AAPL stock for the rest of 2022. I’m bullish on the stock.

Apple’s March 8 Keynote

Regardless of where AAPL stock heads next, I think there’s real value to be had from one of the most fundamentally sound tech stocks out there today.

Services and predictability of the firm’s free cash flow are reasons why Apple stock has been mostly spared from the bear market that’s worked its way through nearly half of the broader market.

Yes, Apple’s decline seems mild, but does it have to follow in the footsteps of the many tech titans currently struggling in a bear market? I’d argue not, given the company seems to have a surprise in the form of a VR/AR headset potentially up its sleeves.

I believe the recent keynote strengthens Apple’s growth thesis further. Not just with its ultra-high-end Mac desktop, but with its low-cost iPhone option that could beckon more people to the company’s ecosystem. 

With baseball added to Apple TV+’s arsenal, the services business also looks to be in a spot to hit a home run.

Apple’s M-Series Keeps Getting Better

Just when you thought the M1 Max was the best that it could get for Apple’s current generation of silicon, the company unveiled its M1 Ultra chip. It truly is Apple’s best chip yet.

Early signs show that the M1 Ultra blows away the competition, giving Apple a massive moat around the ultra-high-end segment.

As the second generation of the M-series line of chips is unveiled likely later in the year, it could prove nearly impossible to top Apple, as it looks to one-up itself to bring the Mac to the next level.

iPhone SE 2022 with A15 Bionic

Yes, the iPhone SE was not at all exciting, given it’s not a top-of-the-line smartphone. It should have Apple investors more excited than Apple users, though. 

Why? The $429 phone provides an incredible bang for the buck. With the A15 Bionic chip, SE users will get top-of-the-line performance for a very low price of admission. While the design is old-school (it looks like the pre-iPhone X device), its internals are indeed powerful.

While prior SE offerings or the iPhone 5C have had somewhat decent success, I think the A15 Bionic chip and the modest entry point will allow Apple to start moving in and taking real share in markets where it’s had limited success taking off.

Apple TV+ Hits a Grand Slam

Apple TV+ has been steadily getting stronger. With more intriguing titles landing on the platform, it appears that the video-streaming underdog could be in a spot to climb the ladder. 

The firm has hit a few home runs, and I’m not just talking about MLB rights.

A great deal of content is starting to stick, with Black Mirror-like hit show Severance boasting incredibly high reviews thus far. 

Wall Street’s Take

According to TipRanks’ analyst rating consensus, AAPL stock comes in as a Strong Buy. Out of 29 analyst ratings, there are 24 Buy recommendations and five Hold recommendations.

The average Apple price target is $193.32, implying an upside of 22.6%. Analyst price targets range from a low of $161 per share to a high of $215 per share.

Bottom Line on AAPL Stock

Apple’s keynote probably didn’t excite most Apple users. It did, however, cater to the very high-end with its M1 Ultra and the lower-end with its budget device in the iPhone SE 2022. Apple is getting serious about onboarding users at all corners of the PC and smartphone markets.

I think it could give the company a nice jolt to its sales growth, all while the company is hard at work on its next big hardware device that could really ignite sales growth.

Apple may also be sitting on the VR/AR headset of the future or a self-driving Apple Car. Given such powerful revenue drivers that could kick in within the next five years, I think to assign AAPL stock a price-to-earnings multiple below 30 is severely discounting the company’s earnings growth prospects.

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