Apple Stock is Performing Well So Far in 2023

Apple is the largest technology company in the world by market value. In the first quarter of fiscal year 2023, Apple reported a net income of approximately $30 billion. Apple’s net income figures have increased immensely in the past 10 years, with the yearly total rising from just over six billion dollars in 2008 to around 102 billion in 2022.

So far in 2023, Apple (AAPL) stock has been on a winning streak with the share price climbing 22% YTD.

Read on to learn more about tech giant Apple, the reasons for its recent success as well as prospects for the company.

About Apple

Apple Inc. (AAPL) is a global tech company that designs and manufactures personal computers, smartphones, tablets, computer software, and accessories. Its main products include the iPhone, Mac personal computers and laptops, iPad, Apple Watch, and Apple TV. The company also has a fast-growing services business that includes its iCloud cloud service and its digital streaming-content services, such as Apple Music and Apple TV+.

Rivals of the tech giant include Samsung Electronics Co. Ltd., Dell Technologies Inc., Netflix Inc., and Microsoft Corp.

Apple outperforms the S&P 500 and the Nasdaq

Apple stock has performed extremely well so far this year, outperforming the S&P 500 and the Nasdaq with 22% YTD gains. Here are some updates for 2023 so far.

• Apple stock has risen 22% YTD in 2023, surpassing the S&P 500 and the Nasdaq 100 by at least 10 percentage points.

• Possibly the main factor contributing to the good start to Apple this year has been peak inflation, which has eased the Fed’s hawkish position.

• Supply chain constraints are slowly resolving and iPhone sales are expected to bounce back in fiscal Q2.

The end of peak inflation

Things have been weak on the macroeconomic front. The SVB Financial crisis unleashed what could be a domino effect in the financial services sector. Even Credit Suisse and Deutsche have shaken the markets. However, there is a silver lining. As economic conditions worsen, inflation seems to have reached a peak. The CPI (consumer price index), which reached a high of 9.1% in June 2022, has progressively lowered to an 18-month low of 6.0% in February 2023.

Lower inflation is certainly not a good thing on its own for Apple shares, but the easing of the Federal Reserve’s hawkish position has been positive. After raising the federal funds rate up to a maximum of 75 basis points at a time, the US Central Bank increased it by just 25 bps in the most recent meeting. Better still, the anticipated ceiling of 5.1% is starting to stabilize; this suggests the potential end of inflation worries and the cycle of rate hikes. This may be the reason why assets sensitive to interest rates have performed well so far in 2023, from treasuries to semiconductor ETFs. Apple stock has also benefited.

Supply chain constraints ease

The major factor that caused Apple’s most recent quarter to look as bad as it did, particularly on the iPhone side, was the supply chain constraints in China.

CEO Tim Cook and team seem to think that demand for Apple’s products remains strong, according to the most recent earnings call. But demand does not do the company a lot of good if it cannot make and deliver these products.

Apple has been addressing the supply issue in a few different ways. For the long term, the tech giant has been focusing on diversifying its supplier base away from China. For example, key supplier Pegatron is opening more manufacturing capacity in India. China has suffered recently from lockdowns due to COVID, but manufacturing capacity in the country seems to be getting back to normal.

The start of 2023 has already been much better for Apple. Wedbush’s Dan Ives believes, that “we are seeing no major unit cuts from suppliers in Asia around iPhone production yet, which is a good sign”.

iPhone sales may bounce back

No one outside Apple’s HQ located in Cupertino, California will know for certain whether the iPhone has been recovering from a weak 2022 holiday quarter until fiscal Q2 results are reported in a few weeks. But there are a few signals that this might be the situation. Analyst Dan Ives seems hopeful when he says:

“The months of January and February and early indications around March are steady on the iPhone front for Cupertino globally which is a stark contrast to what we saw in the supply-constrained December quarter.”

The research team at KeyBanc echoed the positive views when it revealed the results of its proprietary consumer survey.

Analyst Brandon Nispel thinks that spending on Apple transactions has been tracking at least at the same level with guidance. His conclusion is supported by the fact that February’s seasonally-adjusted numbers improved considerably.

In the current quarter, iPhone sales will face relatively easy comparable company analysis, both YOY and sequentially. This time last year, segment revenues increased by just 5%. This was the second-worst quarterly reading since the beginning of fiscal 2021. Last quarter, revenues declined by 8%.

Therefore, it is possible that iPhone sales will bounce back in fiscal Q2, and Apple stock may already be reacting positively in anticipation.

Apple’s predicted 5-year growth

With a long history, Apple (APPL) stock is one of the most popular stocks in the world. The stock has seen significant growth in recent years and its price is projected to increase even further.

Apple’s revenue growth forecast is expected to average 5.3% over the next 5 fiscal years. Apple’s share value is predicted to reach $220 by the end of 2023, $250 in 2024, $315 in 2025, $370 in 2026, $425 in 2027, $465 in 2028, and $480 in 2029. In 2030, analysts predict Apple shares will be worth $510.

Even though many believe Apple shares will continue to grow in the coming years, it is important to understand that investing in any kind of stock carries risk and there is no guarantee of a return on investment.

Disclaimer:

This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.