Apple Stock Forecast: Is AAPL a Buy?

Written by Sean GraytokUpdated: 8th May 2022
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This Apple Stock Forecast will evaluate the investment potential in the company moving forward. 

Apple Stock Forecast: Investment Potential

Apple was one of the first Silicon Valley success stories — starting in a garage back in 1976 selling personal computers.

Today, Apple’s $3 trillion market cap makes it the largest company in the U.S., and second largest in the world.

There are over 1 billion iPhones in active use and 1.65 billion devices in active use overall. 

Apple is setting its eyes beyond personal computing and mobile devices, though, and entering new markets like wearables, streaming, payments, voice, and even autonomous vehicles.

Few could have predicted what Apple would look like in 2022, and even less could tell you what it’ll be doing in 2030.

Apple’s loyal user base will follow the company into whatever market it enters — resulting in an unknown but nonetheless exciting future for Apple stock.

Apple Stock Forecast: Economic Moat

We believe that Apple’s most noteworthy moat is its status as a luxury brand.

Apple has been one of the best storytelling brands in history, telling the world to “Think Different” in 1997 and branding itself as the obvious choice for the dreamers, risk-takers, creatives, and move-makers.

Apple’s operating software, most recently iOS 14, is a moat too. Vertically integrating several products, like connecting your iPhone to your Apple Watch or Apple TV+, encourages users to stay within the Apple arena.

This integration makes Apple products “sticky”, meaning they have high retention rates as they deliver consistent value and reinforce each other’s use.

Adding subscription revenue only multiples these products’ potential – enter the Apple One bundle, which combines six Apple services into one easy subscription.

The bundle includes Apple Music, Apple TV+, Apple Fitness+, Apple News+, iCloud, and Apple Arcade.

Another more controversial Apple moat is its App Store, one of the world’s largest commerce centers, facilitating half a trillion dollars in sales alone last year.

After monopolistic scrutiny, specifically from Epic Games and Spotify, Apple announced it would reduce its revenue commission on the App Store to 15% from 30%.

This means that developers making $1 million through the App Store pay Apple $150,000 to process payments on the platform.

Finally, Apple prioritizes its user’s privacy, which Big Tech is often criticized for exploiting.

However, it’s important to note that Apple isn’t really in the data aggregating business, like Facebook and Google.

Apple benefits from painting the other Big Tech names as bad guys, especially in areas where its hands are clean, like data privacy.

Remember, Apple understands the importance of storytelling, and it will actively control its public narrative at all costs.

 

Apple Stock Forecast: Earnings 

Apple reported first quarter 2022 earnings on January 27th, 2022. Here are the numbers:

  • EPS: $2.10 vs $1.89 estimate3d, up 25% year-over-year
  • Revenue: $123.9 billion vs $118.66 billion, up 11% year-over-year

So $123.9 billion in revenue for the quarter. Nice.

Here are revenues by segment:

  • iPhone: $71.63 billion vs $68.34 billion estimated, up 9% year-over-year
  • Services: $19.52 billion vs $18.61 billion estimated, up 24% year-over-year
  • Other Products: $14.70 billion vs $14.59 billion estimated, up 13% year-over-year
  • Mac: $10.85 billion vs $9.52 billion estimated, up 25% year-over-year
  • iPad: $7.25 billion vs $8.18 billion estimated, down 14% year-over-year
  • Gross margin: 43.8% vs 41.7% estimated

This was an exceptionally important earnings call for Apple and the rest of the stock market — and Apple delivered. 

It was the largest single quarter in terms of revenue ever. 

The company beat estimates for every product line with the exception of the iPad. 

Apple CEO Tim Cook said that the company’s biggest issue was “chip supply”. However, Cook added that the company’s supply issues were improving. 

Shares spiked 5% following the call. 

Apple Stock Forecast: The Competitors By Vertical

Before investing in Apple stock, it’s important to know the company’s competitors. Like the other FAAMG giants, Apple has its hands in several different markets.

While we don’t subscribe to a “winner-take-all” approach in the tech space, we believe that “winner-take-most” is appropriate.

Let’s examine Apple’s top competitors:

Mobile Devices (iPhone and iPads)

  • Samsung
  • Alphabet (GOOG, GOOGL)
  • Microsoft (MSFT)

Computers (Macintosh Series)

  • Dell Technologies (DELL)
  • HP (HP)
  • IBM (IBM)

Wearables (Apple Watch and AirPods)

  • Alphabet (GOOG, GOOGL)
  • Garmin (GRMN)
  • Samsung
  • Amazon (AMZN)
  • Sony (SNE)
  • Sonos
  • Bose

Mobile Payments (Apple Pay)

  • PayPal (PYPL)
  • Block (SQ)

Streaming (Apple TV+)

  • Netflix (NFLX)
  • Disney (DIS)
  • AT&T -HBO Max (T)
  • Amazon (AMZN)

Music (Apple Music)

  • Spotify (SPOT)
  • Square – TIDAL (SQ)
  • Alphabet’s YouTube Music (GOOG, GOOGL)
  • Amazon (AMZN)

Coming Soon: Vehicles (iCar?)

  • Tesla (TSLA)
  • Alphabet’s Waymo (GOOG, GOOGL)
  • Every other auto maker

There is a common theme threaded through all of these markets: Apple is competing for your attention.

The more time you use Apple devices, the better the company performs and the more its share price rises.

For example, Apple is getting into the auto industry so it can be with its users for a few more hours each day.

This is why Apple’s acquisition possibilities are both endless and exciting. Some are even speculating that Apple will acquire Peloton to own the home fitness market.

According to Apple CEO Tim Cook, health will be Apple’s “greatest contribution to mankind.”

Apple Stock Allocation in Your Portfolio

The right allocation of Apple stock will be different for each investor based on their investing goals, time horizon, and risk tolerance.

While it’s important to not be too overweight in any individual company, Apple is one of your better options if you’re going to be over-allocated.

Apple is the largest holding of the major indices, accounting for 6.7% of the S&P 500and 11.5% of the tech-heavy Nasdaq QQQ.

So, even if you choose not to own Apple directly, you’ll get plenty of exposure in these benchmark funds.

Apple Stock Forecast: FAQs

What will be the price of Apple stock in 2022?

While it’s impossible to know what the price of Apple stock will be in 2022, shares in the company continue to make new all-time highs. Apple is the premier blue-chip stock on the market, and composes a large percentage of many popular ETFs and funds that see billions in inflows regularly. 

Is AAPL a buy right now?

AAPL is a buy right now if you’re seeking exposure to a Big Tech company that is favorably positioned amongst its competitors. However, certain geopolitical tensions make Apple more vulnerable to deglobalization than your average company. 

Is AAPL a buy, hold, or sell?

AAPL is a buy, hold, or sell depending on your own unique risk to reward profile and your investing time horizon. If you’re a long-term investor, it’s probably best to stay invested in your winners instead of trying to avoid short-term price corrections. As long as the money supply continues to expand, shares of Apple will probably go up. 

What is the target price for Apple?

According to various Wall Street analysts, the target price for Apple is anywhere between $160 on the lower-end and $215 on the higher-end. 

Bottom Line: Apple Stock Forecast

Investing in companies with a loyal following has been a tried-and-true investment strategy for decades, and if one thing’s for certain, Apple has a loyal following.

While you’re unlikely to get a 10,000% return on Apple stock from here, we believe the trajectory of Apple stock is as promising as ever.

More Investing Resources:

This article is for informational purposes only, and it is not intended to be investment advice. Read our editorial guidelines and public equities research methodology to learn more about how we researched Apple (AAPL) stock.

Sean Graytok
Sean Graytok

Sean Graytok is our Co-Founder and is a recognized expert in investing, financial management, and Bitcoin. His work has been cited in leading industry publications, such as InvestorPlace and Business Insider. Sean is interested in the people and companies who are driving technological innovation.