Apple Enters Oversold Territory: Time to Buy?

Key Points

• Apple's stock has dropped almost 12% year-to-date, lagging behind competitors and the overall market, which surged 8% YTD and nearly 30% annually.
• In 2024, Apple lost its top spot as the most valuable company to Microsoft, with Nvidia posing a competitive threat if Apple's stock doesn't recover.
• Apple's RSI at 22.02 indicates oversold conditions, potentially signaling a reversal if the stock finds support near $170.

Shares of the hardware and software consumer products giant Apple NASDAQ: AAPL have had a year to forget. The company’s stock has fallen over 12% year-to-date, bringing its one-year performance to a modest increase of 11.5%.

Not only does that performance pale compared to its competitors and sector peers, but it also falls vastly short of the benchmark performance. The overall market has climbed to new heights, up over 8% YTD and almost 30% over the previous year.

So far, in 2024, shares of Apple have lost out on the top spot as the most valuable company in the world to Microsoft. If the stock can't find its footing soon, it will likely fall to another place thanks to the remarkable growth of Nvidia, which is currently the third most valuable company in the world. 

However, with a modest P/E, projected earnings growth, and favorable analyst price targets and ratings, could now be an opportune time to pick up shares of AAPL amidst the steep selloff? Let’s unpack the latest developments surrounding the stock and examine the fundamentals and technicals. 

Apple’s AI Push, Recent Challenges, and Robust Financials

Apple is poised to capitalize on integrating AI technology across its diverse products and services, including the iPhone, iMac, Apple TV, and Siri. This move underscores the company's commitment to leveraging AI advancements to enhance user experiences and productivity. CEO Tim Cook highlighted Apple's strategic focus on AI, emphasizing its potential for groundbreaking innovation and problem-solving capabilities.

During the company's annual shareholder meeting, Cook's remarks underscored Apple's significant investment in AI, particularly in the realm of generative AI, which he believes holds immense promise for the future. Additionally, the CEO lauded the Mac with the Apple Silicon Chip as the premier platform for AI computing, further cementing Apple's position in the AI landscape.

However, recent developments present challenges for the tech giant. European Union regulators are set to question Apple's decision to terminate Epic Games' developer account, effectively blocking the gaming company from launching Fortnite and the Epic Games Store on Apple's iOS devices in the EU. Epic Games CEO Tim Sweeney has accused Apple of violating the EU's new Digital Markets Act rules, sparking the possibility of a legal clash that could result in significant penalties for Apple. This incident comes on the heels of a $1.95 billion fine imposed on Apple by the EU for anticompetitive practices in the music-streaming market.

Despite these challenges, Apple continues to demonstrate robust financial performance. In its latest earnings report, Apple exceeded analysts' expectations with earnings per share of $2.18 for the quarter, driven by revenue of $119.60 billion, surpassing estimates. The company's revenue increased by 2.1% compared to the same quarter last year, reflecting its resilience in the face of evolving market dynamics. 

Shares Approach Major Support, Analysts See Upside

As shares of the global technology giant continue to fall this year, analysts are now predicting the most upside for the stock in over a year. The consensus price target of $205.27 is forecasting a staggering 21.46% upside for AAPL, a move that would see it once again become the most valuable company in the world. Currently, Apple has a moderate buy rating based on thirty-three analyst ratings.

From a technical analysis perspective, Apple's shares are in oversold territory. Its RSI is currently reading 22.02, indicating that the stock is approaching an extremely oversold level in the short term. The stock has also begun to extend from several major moving averages to the downside, approaching a significant level of support near $170. If the stock can find support near this region and put in a higher low, the momentum might shift, and the bottom could be in.