Will the Apple Inc. NASDAQ: AAPL iPhone 15 be enough to get the stock back into rally mode?
Will some kind of AI implementation be the key to the stock’s eventual upward reversal?
Or will other institutions take a cue from Warren Buffett, whose Berkshire Hathaway Inc. NYSE: BRK.B counts Apple as its biggest holding by market value, accounting for more than half of the firm’s equity position?
Since Berkshire purchased Apple in 2016, it’s notched strong appreciation, but for investors looking to add to their stake right now, there are some quandaries to consider.
Stock Skidded Since July 19 Peak
To understand the stock’s current prospects, take a look at the Apple chart. The stock is down 12% since its July 19 peak of $198.23, gapping down 4.80% on August 4, following a quarterly earnings report that failed to light a fire under investors, as revenue slipped by 1% in the quarter as iPhone sales decreased.
It was the third quarter in a row that device sales and total revenue declined year-over-year. The MarketBeat’s Apple earnings data show, however, that the stock beat revenue and net income views.
But the company said it expects some weakness in the current quarter: Despite forecasting that iPhone sales will pick up, the company expects a drop in tablet and Mac revenue.
Apple stock is down 2.10% in the past week and 10.18% in the past month. Year-to-date, it’s maintained a gain of 34.46%.
Apple Shares Stagnant Over Past Year
But if you take a longer-term view of the Apple chart and its return, it gets interesting: On a one-year basis, Apple shares are up only 0.22%. The stock is trading almost exactly where it was on August 19, 2022. So there’s been essentially no return to speak of in a year.
Apple stock has behaved like this before. For example, the stock began meandering sideways in April 2015, then pulled into a correction that lasted until February 2017. During previous broad market pullbacks, such as the early 2000s and the broad meltdown from 2007 through 2009, Apple also remained mired in corrections.
Obviously, those situations resolved themselves, and Apple has posted a 15-year return of 25.14%.
But with the iPhone 15 launch coming up in September, does the current pullback offer a buy opportunity?
Analysts Have "Moderate Buy" Consensus
On the one hand, the company is saying not to expect a blowout quarter. On the other hand, MarketBeat’s Apple analyst ratings show a consensus view of “moderate buy,” with a price target of $198.86, an upside of 14.02%. That price would take the stock to a new high, clearing the previous peak from July 19.
However, analysts have mixed forecasts when it comes to iPhone 15 sales, and about the company’s prospects in the coming months. After the fiscal third-quarter report, four analysts boosted their price targets on the stock, while three lowered their targets.
Analyst ratings generally take into account price movement that’s expected over the next 12 to 18 months.
Analysts and investors are looking to what’s in the immediate future, namely, the iPhone 15.
Apple's Machine Learning Capabilities
But much of the tech rally this year has been due to something that Apple isn’t particularly known for, which is AI.
According to reports, at a June presentation at its Worldwide Developers Conference, Apple mentioned the term “machine learning” without specifically mentioning AI, although the terms are essentially interchangeable.
Apple’s iPhone, Mac, and iPad products are built using Neural Engine, a chip designed for machine learning applications.
Developing AI Chatbot
Apple isn’t known for its initiatives in generative AI, but the company has reportedly been developing an AI-fueled chatbot that’s being tested internally, but the company has no plans to release it anytime soon.
As all investors know by now, Apple is not a company to sit on its laurels and deny technological changes. While it’s not actively touting AI capabilities, it stands to reason that it’s been integrating machine learning into its products, as well as developing a chatbot.
All of this means that the current pullback could well be a buying opportunity, although more cautious investors may want to wait for the stock to turn higher before diving in, which could be some added insurance that the rally has some legs.
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