Apple (AAPL) Stock Analysis & Forecast

Updated: 8th Jan 2022
Written by Sean Graytok
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Are you considering investing in Apple stock? Good news — you’re in the right place.

Here’s what you need to know before buying shares of Apple. 

Apple 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.

>> More: Best Blue-Chip Stocks to Buy

Apple Stock 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.

>> More: Join The Motley Fool Stock Advisor & see their top 10 stocks to buy right now.

Apple Stock Analysis

Another source of valuable information on Apple stock is its recent earnings report.

Public companies publish quarterly reports to update their shareholders on the status of the company.

Here are the big takeaways from Apple’s most recent quarter:

  • Earnings per share: $1.24 vs. $1.24 estimated
  • Revenue: $83.4 billion vs. $84.9 billion estimated, up 29% YoY
  • iPhone revenue: $38.9 billion vs. $41.5 billion estimated, up 47% YoY
  • Services revenue: $18.3 billion vs. $17.6 billion estimated, up 26% YoY
  • Other Products revenue: $8.8 billion vs. $9.3 billion estimated, up 12% YoY
  • Mac revenue: $9.2 billion vs. $9.2 billion estimated, up 2% YoY
  • iPad revenue: $8.3 billion vs. $7.2 billion estimated, up 21% YoY
  • Gross margin: 42.2% vs. 42.0% estimated

That’s serious growth for a $3T company. 

Apple executives attributed the missed revenue projections to complications in the global supply chain. 

Apple 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)

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)

Streaming (Apple TV+)

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 500 and 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.

>> Lear More: Motley Fool Review

How to Buy Apple Stock

Buying Apple stock has never been easier, thanks to Apple, and can be done on your iPhone. Here is what you need to do:

#1. Open an Account with a Broker

We recommend opening an account with Vanguard or Charles Schwab. They are trusted by tens of millions of personal investors and truly the gold standard for brokerage firms.

We recommend investing in your Roth IRA or Traditional IRA account before allocating it to your brokerage account for tax purposes.

Investing through retirement vehicles encourages you to keep your time horizons long and not disrupt the compounding process.

#2. Fund Your Account

Connecting your bank account or other funding sources to your Vanguard account is also simple.

You’ll be required to provide your bank’s account and routing number and possibly asked to verify micro-deposits for security purposes.

#3. Buy Apple Stock

You can search for Apple’s ticker symbol, “AAPL”,  and directly invest in the company, or indirectly invest in it by purchasing one of the aforementioned ETFs, like VOO or QQQ.

There are currently +400 ETFs that hold Apple, with 200 having it within its top 15 holdings, so it’s pretty difficult to be invested in the market and not have exposure to Apple.

Note that some brokerage services, like Robinhood, allow investors to buy Apple’s fractional shares, meaning that you can own as little as $1 worth of Apple stock.

>> Related: Best Stock Trading Platforms

Bottom Line: Apple Stock

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 40,000% 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. It is not intended to be investment advice.

Sean Graytok
Sean Graytok

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