Publication date: January 23, 2025
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Apple Inc. known for the iPhone, iPad, and MacBook and innovative technology such as the Apple Watch and AirPods probably needs little introduction. Within the technology sector, Apple is the best-known brand name worldwide alongside Google and Microsoft.
When we talk about a top player, Apple certainly qualifies. Over the past decade, its share price has increased tenfold. Since the introduction of the iPhone in 2007, the current share price is even sixty times higher. Below you will find the price chart of the past ten years that shows at a glance the enormous advance of Apple.
For a month the star performer is somewhat out of shape and the shine seems off for now. In this article, we look at the current decline. Should we take the star player off the field and swap him for a new prodigy? Below is our analysis.
What is the current situation at Apple?
Apple's share price has been lagging far behind its peers for a month now, returning to the levels it was at before Donald Trump's election victory in early November.
Below is Apple's stock price chart over the past few months which clearly shows the drop of over 15%.
The reason for the decline are more than one. The company was criticized from the industry for its lack of innovation and for milking customers within a closed ecosystem. This would be unsustainable in the long run. Leading U.S. banks and asset managers lowered their advice for Apple because of falling iPhone sales figures and weak demand for the artificial intelligence (AI) features in newer models that could cause Apple to miss quarterly revenue expectations. Apple is expected to announce its figures on Thursday, Jan. 30.
In addition, Apple lost its coveted position as China's largest smartphone seller last year. Moreover, Apple relies heavily on China for production and there is uncertainty about the relationship between the U.S. and China now that Donald Trump is in power.
Finally, another important change in Apple's situation;
In 2024, influential investor Warren Buffett sold 75% of his stake in Apple. This sale seems prescient in retrospect. Although Apple rose in November 2024 following Donald Trump's election victory, fundamental growth rates remain weak. Buffett is known for his long-term vision and often sells when stocks are perfectly priced according to his analysis. With a high P/E ratio of 37, against a historical average of 15-20 in the 2010s, Apple does indeed appear overvalued.
Apple's high valuation indicates that investors are counting on decades of stable growth and profitability. However, according to insiders, Apple has not brought groundbreaking innovation since the iPhone, while companies like Meta may be forging plans to capture market share.
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What is Apple's stock price expectation?
Overall analyst expectations and advice vary. The fundamental analysts from the well-known banks hold Apple at Buy. The majority of technical analysts consulted place the stock at Sell. This would imply that in general the long-term expectation is positive but it is not a good buying moment technically at the moment.
If we start from our own mathematical model, this is indeed in line with the general analysis. For the first half of the year, we expect a larger correction in Apple shares. This may lead to the $195-$175 zone. Currently, the price stands at $223.
We will keep the forecast for the period after the first half of 2025. This cannot be determined with sufficient probability at present. We will come back to this in a follow-up article. For now, we may expect a modest recovery and then the continuation of a larger correction.
Which technology stock is attractive now?
Whereas Apple's shine seems a bit off for now, we can say that Nvidia's star status is rising. We wrote about Nvidia back in October 2024. Please refer to the article by clicking on the following link: NVIDIA: Ready for the next sprint
Nvidia has performed superbly in 2024 and has been on a sideways correction for months. This is the makeup for the announced next sprint. The expectation is an initial price target at $181 with a longer-term continuation to the $225 level. Currently, Nvidia is quoted at $147.
Below is Nvidia's price chart with the most likely course plotted.
Conclusion
Apple remains a great brand and a successful company. After a fantastic rise in the share price in recent years, the market now seems ripe for a larger correction. This could bring the stock back from its high at $260 to $175. As reported, you may want to consider switching the star player of past years for the one that has already proven itself for the future. Nividia has everything it needs to prosper in the stock market in both the shorter term and longer term.
Back in October, we gave a positive review and it still stands. As a result, you might consider unwinding your position in Apple and expanding your position in Nvidia. January 30, Apple releases figures and a month later Nvidia's figures are expected.
Disclaimer: Investing involves risk. Our analysts are not financial advisors. Always consult an advisor when making financial decisions. The information and tips provided on this website are based on our analysts' own insights and experiences. They are therefore for educational purposes only.