📈 Apple (NASDAQ:AAPL) is set for a strong Q4 2024, driven by the successful launch of the iPhone 16. Sales are projected to grow by 7% in 2025 and another 5-7% in 2026, with new features encouraging upgrades. The Apple Intelligence platform, available in iPhone 16 and 15 Pro models, enhances device functionality with advanced email management and content summarization—all at the same starting price as the iPhone 15 last year.
📊 Despite recent declines in China, the new iPhone cycle could reverse this trend. Apple is also boosting its presence in India, capitalizing on rising local wealth and investments in manufacturing capacity. Beyond hardware, Apple’s services—one of its most profitable segments—boast margins over 74%. Growth in cloud, gaming, and subscription services contributes significantly to these results. Expanding in high-margin services will help maintain gross margins in the mid-40% range.
💰 Free cash flow is expected to surpass $110 billion in 2024. This cash position supports Apple’s buybacks and EPS growth. While the stock trades at a premium P/E of 34-35, it reflects Apple’s dominance and brand status. The company’s ability to replicate innovations like foldable screens and wearable AI peripherals keeps it ahead of trends.
📉 Risks include potential product failures and delays in upgrades. Regulatory scrutiny in the U.S. and abroad could also impact margins. However, Apple’s ecosystem and loyal customers reduce these risks, maintaining its leading position.
🚀 The holiday quarter could drive Apple shares into the $240-$260 range. My 2025 target is $255, based on a P/E of 30 and 2026 EPS of $8.50. Although high, Apple’s growth and margins justify the premium. The iPhone cycle and services suggest further success.
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IMPORTANT: This article is of general nature only and readers should obtain advice specific to their circumstances from professional advisers.