apple(Nasdaq: Apple) It is one of the largest publicly traded companies in the world, with a market capitalization of US$3.7 trillion, and continues to attract investor attention as it slowly steps into new areas of innovation, such as artificial intelligence (AI).
The tech stock easily outpaced Standard & Poor’s 500 Over the past three years, it achieved gains of 37% compared to the index’s gains of about 24% (as of this writing). However, given its already massive size, some investors will wonder whether this giant has enough innovation to continue generating amazing returns. So let’s take a look at the case for buying, holding or selling Apple this year.
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Apple offers investors the opportunity to ride some of the biggest waves in technology, such as (Such as artificial intelligence) without as much risk as the types of large stock price fluctuations that some small-cap stocks experience. Apple systematically introduces new features and services. It often takes a slower approach than some competitors, but in the end it benefits a lot from using this approach.
For example, Apple launched several new services (Apple Arcade, Apple TV+, Apple News+, and Apple Card) in 2019. In the first nine months of 2024, its services segment generated $96 billion in sales.
However, skeptics have accurately pointed out that Apple hasn’t introduced a new must-have device with mass appeal in years. Adding to the case against buying Apple is that its shares are relatively expensive right now, trading at a forward price-to-earnings ratio of 33.6, compared to the S&P 500’s forward ratio of 23.4.
I don’t think owning Apple is a bad idea if you’re looking for a slow-growing tech giant that still has the potential to offer new products and services, but you’re probably missing out on a lot of potential right now. If you choose not to buy the stock.
I already own some Apple stock, so I’ve thought a lot about why I should hold them. Although there may not be a compelling reason for some investors to buy Apple now, I think there is one reason why it might be worth keeping it in your portfolio: artificial intelligence.
The industry is still in the early stages of the AI era, and Apple could eventually benefit from this technology. It recently introduced Apple Intelligence on its latest devices, a suite of tools and services that help users with a range of tasks such as writing emails, summarizing notifications, and tracking their appointments. Apple’s AI can hand off a user’s query to ChatGPT if it can’t handle the request itself.
It’s still unclear how Apple will make money from this, aside from giving users a new reason to upgrade their old phones. Apple may also eventually integrate its AI into the subscription of its services, charging people for access to more advanced features. There’s also been some chatter around the idea that Apple Intelligence could eventually be paired with a user’s choice of an AI-powered chatbot like ChatGPT, Gemini, or Claude, and that Apple would then get a cut when its users upgrade to a premium AI service.
The point is that Apple is rarely left behind in the long term when it comes to new market opportunities, so I’m holding on to some Apple stock to see where the company goes in its AI endeavors.
When it comes to the question of whether or not you should sell Apple, the answer will partly be personal for each investor.
The investment thesis you had for the company when you bought the stock is no longer valid.
The company is acquired.
You need money.
You want to rebalance your portfolio.
You have identified better investment opportunities.
Although I will be holding some shares as well, I have considered selling some of my Apple shares for the last reason on that list. I’m optimistic about Apple benefiting from AI, but there are clearly many fast-growing tech companies that are benefiting from it much more right now.
If you own some Apple stock, take a look at the list above and ask yourself if any of these reasons apply to your personal investment strategy. Regardless of which company is being bought (which Apple is certainly not at risk), the reasons for selling will mostly come down to personal preferences based on your investment strategy and financial needs.
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