Apple is down more than 13%, reasons why analysts are not pessimistic (RELATED PRESS)
2024 is going to be a tough year for Apple. The company’s stock price has fallen by around 11% so far this year; iPhone sales in China, its third largest market, are slowing; The European Commission, the European Union’s competition regulator, recently imposed an antitrust fine of US$2 billion on the company and strengthened supervision in all aspects. . Apple said it would appeal. This is not over yet for the US, as the Department of Justice is reportedly preparing to file an antitrust lawsuit against the company.
These headlines are enough to hurt any company. But Apple is no ordinary company, being the second largest listed company in the world by market value after Microsoft, and with more than 2.2 billion Apple devices in use worldwide.
And at least two Wall Street analysts say the company has a few tricks up its sleeve that could boost its business in the coming months, including its potential in generative artificial intelligence (AI) and leveraging its user base. huge to improve its Sales services.
Or rely on generating AI to eat paste
Wall Street is obsessed with all things productive AI. While Nvidia and Microsoft seem to be the biggest beneficiaries of the market’s love for the technology, Apple could also benefit greatly from the explosive growth of AI.
Evercore ISI analyst Amit Daryanani wrote in a recent report: “We believe Apple’s AI strategy will focus on integrating large language models (LLM) for on-device inference, which will not only significantly improve the iPhone user experience, but also greatly improving. Mac/iPad user experience.”
Also, it can encourage people to buy new devices. “Given their vertical integration, and especially their control over their own silicon, Apple appears to be in the best position not only to widen the moat of the iOS ecosystem, but also potentially to drive acceleration if the implementation is considered eventually change big enough. Update Circle,”
For years, Apple has been adding neural network engines to custom chips in its iPhone, iPad and Mac lines, which would also help run artificial intelligence applications and potentially allow the company to develop generative artificial intelligence on its devices . . Artificial intelligence software on a device means people can more easily access productive AI programs and improve security because users don’t have to share data over the Internet.
Service sales are still the winners
Apple’s huge market base of 2.2 billion devices also means it has huge opportunities to grow its services business. Over the past three years, Apple’s annual services revenue (including subscription services such as Apple TV+, AppleCare and Apple One) has increased from US$68.4 billion in 2021 to US$78.1 billion in 2022 and US$85.2 billion in 2023. Analysts say there is more runway.
Daryanani said Apple’s services growth is “underestimated” and that he expects “growth (in fiscal 2024) to be in the low double digits.”
Apple makes people pay more
One of Apple’s greatest strengths is its ability to get people to pay more and more for their iPhones. The company has achieved this by launching a series of high-end Pro phones and equipping them with unique features such as better cameras and, more recently, more powerful processors. Further features, in turn, could encourage consumers to buy a Pro phone, which is more expensive than a standard iPhone.
He explained: “Despite the slowdown in sales, Apple was able to add value to its product portfolio, which is a long-term trend, offsetting a possible decline in sales in China.”
All of this shows that despite Apple’s challenging year, the company still has a lot to do and has nine months to turn things around.
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