Apple is facing significant challenges in 2024 and raising concerns about whether to sell Apple stock or not.
Despite the company’s immense cash flow and recent attempts to bolster sales, several underlying issues suggest that now might be the time for investors to sell Apple stock. Below are three primary reasons which justify that investors should sell Apple Stock in 2024:
1. Increasing Competition in China
One of the most significant threats to sell Apple stock is the growing competition in China. Historically, Apple has enjoyed substantial success in this crucial market, but recent developments have shaken its dominance. In response to declining sales, Apple launched an aggressive discounting campaign on its official Tmall site in China, offering discounts of up to 2,300 Yuan (approximately $318) on select iPhone models. This move aims to combat the increasing pressure from local competitors such as Huawei and Honor.
Huawei’s resurgence, particularly with the release of the Mate 60 Pro and Pura 70, both boasting advanced in-house technologies, has made a significant dent in Apple’s market share. At the end of Q1 2024, Huawei and Honor overtook Apple as the top smartphone brands in China, with market shares of 17.1% and 17%, respectively. This shift signals a potential long-term challenge for Apple, as it faces a formidable opponent in Huawei, which has successfully navigated U.S. sanctions to strengthen its domestic semiconductor ecosystem.
2. Grim Outlook for Consumer Tech Products
The broader market for consumer technology products is also troubling. After the initial surge in demand during the COVID-19 pandemic, the sector is now experiencing a significant slowdown. Inflation and high interest rates have exacerbated this issue, leading to decreased consumer spending on technology products. Apple’s Q2 2024 earnings report reflected this trend, with total quarterly revenue falling by 4% to $90.8 billion. Product revenue, which includes iPhones, iPads, and MacBooks, fell by nearly 10% year-over-year.
Although Apple announced the largest share buyback program in its history and showed optimism about long-term growth, these measures have not masked the underlying issues. The company’s reliance on its flagship products in a saturated market with sophisticated competitors continues to pose a significant risk to its future growth prospects.
3. Lack of Long-Term Product Strategy
Apple’s current predicament is further compounded by a perceived lack of a coherent long-term product strategy. While the company generates substantial profits, its ability to innovate and introduce new, successful products has come into question. The much-anticipated Apple Car project and the in-house wireless modem initiative have both failed to materialize, casting doubt on Apple’s future innovation pipeline.
Moreover, the upcoming M4 chip intended for new MacBooks and potential AI-enhanced products may not be enough to reignite consumer interest. The demand for AI products is predominantly driven by enterprise needs, particularly in cloud computing and large data centers, which Apple has yet to tap into effectively. As such, consumer-driven AI products may not provide the boost needed to reverse the declining sales trend.
Apple’s challenges in China, coupled with a grim outlook for consumer technology and a lack of groundbreaking innovations, paint a concerning picture for the company’s future. While Apple remains a profitable entity, these factors suggest that its stock may not be the safe investment it once was. For these reasons, investors should sell Apple stock in 2024 to avoid potential declines as the company navigates these significant headwinds.
3 Stocks to Buy if you sell Apple Stock
While Apple’s outlook may be uncertain, there are other stocks that investors should buy if they sell Apple stock. Here are three stocks that are receiving strong buy ratings and have promising growth prospects:
1. Amazon (NASDAQ: AMZN)
Amazon, the largest e-commerce company in the world, is also a leader in the public cloud segment and the third-largest digital advertising platform globally. Amazon accounts for 7.5% of the global digital ad market and grew ad sales by 26% to $12 billion in Q3 2023. Despite its massive size, Amazon is forecasted to end 2024 with $600 billion in sales, up from $514 billion in 2022. Its profit margins are also expected to improve significantly, with earnings projected to reach $2.96 per share in 2024.
Out of the 41 analysts covering Amazon, 37 recommend a “strong buy,” up from 34 a month ago. The average target price for AMZN is $172.12, which is 22% above current levels.
2. Microsoft (NASDAQ: MSFT)
Microsoft continues to thrive, driven by its early-mover advantage in artificial intelligence (AI). In fiscal Q1 2024, Microsoft reported revenue of $56 billion, an increase of 13% year-over-year, with strong performance from its software and cloud businesses. Analysts are targeting a revenue increase of 4.8% to $222 billion in fiscal 2024.
Out of the 36 analysts covering Microsoft, 30 recommend a “strong buy,” with the average target price for MSFT at $393.01, which is 8.5% above the current trading price.
3. Nvidia (NASDAQ: NVDA)
Nvidia has surged 100% year-to-date and 2500% over the past five years. As a key player in the AI space, Nvidia’s chips and data centers are crucial for powering AI platforms. The company is forecasted to increase sales from $27 billion in fiscal 2023 to $78 billion in fiscal 2025, with adjusted earnings expected to surge over 400% to $16.07 per share during this period.
Out of the 35 analysts covering Nvidia, 31 recommend a “strong buy.” The average target price for NVDA is $625.53, which is 32% above the current trading price.