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Apple sees longest sales slowdown since 2001; Is AAPL stock still a buy?

Apple sees longest sales slowdown since 2001; Is AAPL stock still a buy?

It’s been a concerning couple of months for the world’s largest company.

Apple (NASDAQ: AAPL) has reported a fourth consecutive quarter of declining sales in its fiscal Q4 2023, marking its longest slowdown since 2001. The fiscal fourth-quarter revenue, ending on September 30, plummeted to $89.5 billion, just slightly surpassing the Wall Street estimate of $89.4 billion. 

The company, grappling with lackluster Mac demand and a tumultuous smartphone market in China, did not offer guidance for the current quarter, maintaining a policy adopted during the pandemic. 

iPhone sales performance

The iPhone business is by far the most important for Apple, despite challenges in recent quarters. The flagship smartphone saw a slightly better-than-expected sales performance, generating $43.8 billion, just above the consensus estimates of $43.7 billion. 

The thing is, though, this is not just any slowdown, but the longest in 22 years.

Analysts were particularly concerned about the deceleration in China, where iPhone bans in certain workplaces and formidable competition from Huawei Technologies Co. have contributed to a revenue shortfall of $15.1 billion for Apple, notably below Wall Street’s estimates of $17 billion.

The iPhone business has been maturing, and investors are wondering if another next big growth driver is emerging for Apple stock. Recently, two business categories have boosted the tech behemoth’s sales and profits: services and wearables.

The company’s services revenue jumped by 16% year-over-year to $22.3 billion, while hardware sales fell 5% to $67.2 billion. 

Analysts’ expectations for holiday quarter

Prior to Apple’s Q4 earnings report release, analysts on Wall Street offered their estimates for the current October-December period, also referred to as the holiday quarter. And they were not particularly bullish.

The experts expect iPhone sales to rise around 6% in the fiscal Q1 2024, according to LSEG data. That growth rate is significantly below historical levels. The average holiday sales growth for the world’s most popular smartphone has been 9.2% in the past four years. 

Overall, revenue is projected to drop almost 1%, amid persisting weakness in iPad and Mac sales, which are estimated to plunge 15% and 25%, respectively. 

Has the AAPL ship sailed?

The short answer is no. 

Apple has proven bears wrong several times in the past. Its loyal and vast consumer base, the ability to continue innovating, and robust fundamentals, have underscored the company’s ‘blue chip’ status. After all, there’s a reason it is the world’s biggest company, with a market cap of roughly $3 trillion. 

There is also a reason why Warren Buffet, one of the most iconic investors that lived, has 51% of his stock portfolio occupied by AAPL. 

That said, Apple is still a sound investment choice. However, it is likely wiser to perceive AAPL as a set-and-forget, long-term buy, because the stock may face bumps in the near term due to the aforementioned challenges. 

AAPL stock price analysis

At the time of writing, shares of Apple were standing at $191.31, up 0.35% on the day.

The stock’s price rose around 1% over the past week, and more than 10% on the month.

AAPL 1-month price chart. Source: Finbold

Year-to-date, AAPL gained 53%, outperforming the broader S&P 500 index. 

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