Apple's Bull Run And Why It's Different

Key Points

• Google and Tesla were both downgraded this week despite big rallies. 
• Apple's fundamentals put them in a different class, however. 
• The technical setup is just as strong, and this rally is still young.

A funny thing has been happening on Wall Street recently. Some of the biggest and brightest tech stocks have received cautious downgrades from analysts despite posting significant returns this year as downtrends are broken and strong uptrends emerge. 

Alphabet Inc NASDAQ: GOOGL, for example, received two downgrades this week, even though its shares have rallied as much as 50% since January. Similarly, Tesla Inc NASDAQ: TSLA shares, despite gaining as much as 170% this year alone, were downgraded by Goldman Sachs on Monday. Investors would be forgiven for thinking that rallies that simply strengthened the bull's case rather than undermined it, so it's understandable that some of the other tech titans who've posted strong returns this year already might be getting nervous. 

Strong Outlook

One such titan is Apple Inc NASDAQ: AAPL, which has been at the forefront of the tech-dominated rally that has helped the benchmark S&P 500 index gain 15% this year. Apple's shares are not only up more than 50% themselves, but they're also printing fresh all-time highs on a daily basis right now. But with the stock's RSI showing a score of 70, indicating overbought conditions, could Apple be the next big name to receive a cooling down order? 

Rest assured, we at MarketBeat think this is unlikely. Yes, Apple has had its strongest first half of a year in over a decade, but if anything, this confirms just how strong a candidate is for a long-term buy and hold. Unlike, say, Google and Tesla, Apple's most recent earnings report strengthened the fundamental support behind the bull's case.

The numbers blew analyst expectations out of the water, their quarterly dividend was raised, and a fresh $90 billion buyback program was authorized. Revenue headwinds have been dissipating for Apple rather than appearing for the other two. 

MarketBeat's MarketRank Forecast tool still rates them as a Buy, as does the team over at Wedbush. Yesterday saw fresh optimism from analyst Dan Ives, who isn't afraid to call for a $4 trillion market cap even as Apple approaches the $3 trillion mark for the first time. Ives has been a long-term Apple bull and holds one of the most positive outlooks on Apple stock and its market potential. 

While many tech companies are starting to lag, Apple is gaining serious momentum. He likened their moves to playing chess while others were only playing checkers and predicted Apple's annual services revenue will reach nearly $100 billion this year. His price target of $220 will offend no one either, and even the all-time high printed on Wednesday suggests there's still a 15% upside to be had for investors getting involved. 

Getting Involved

It's not hard to buy into this optimism, either. Consider for a moment the growing belief that Wall Street has yet to fully grasp the potential for iPhone upgrades and their effect on Apple's revenue. It's predicted that the forthcoming release of the iPhone 15 could initiate a "mini super cycle." It's an interesting call and is based on the fact that a significant proportion, approximately 25%, of iPhone users have chosen not to upgrade their devices over the past four years, so exploiting this untapped market presents a considerable revenue opportunity.

In addition, Apple's ecosystem has perhaps never been more robust, with CEO Tim Cook recently unveiling their new Vision Pro headset. This has been well received and is seen as a crucial step towards Apple establishing a comprehensive app ecosystem driven by artificial intelligence. 

And best of all? The technicals are just as strong as the fundamentals. Apple's multi-month run of higher highs and higher lows with minimal pullbacks suggests none of the big players are taking profits, and having recently surpassed the previous all-time high from 2021, that's now become a solid line of support. There's nothing wrong with being cautious with stocks that have just had big runs, but we could still be at the starting line with Apple.