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Consumer electronics giant Apple (AAPL) has seen its shares pummeled this year on concerns about weakening macroeconomic conditions. But with the pullback in Apple stock, many investors are wondering if AAPL stock is a buy right now.
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Apple Stock Retreats From High
In intraday trading on Jan. 3, Apple briefly hit a market value of $3 trillion when its shares reached 182.86. Apple stock climbed as high as 182.88 that day before retreating. It was the first company to reach a market capitalization of $3 trillion.
On Jan. 4, Apple stock again reached the $3 trillion mark. It notched a record high of 182.94 before pulling back. AAPL stock trended lower in the weeks that followed but it has attempted to rebound several times since then. Apple stock ended the regular session on June 7 at 148.71.
In August 2020, Apple became the first company to reach a market cap of $2 trillion. Microsoft (MSFT) hit the $2 trillion milestone in June 2021. And Google parent Alphabet (GOOGL) followed in November.
Apple’s Storied History
Apple has been an American success story several times over. First, it ignited the personal computer revolution in the 1970s with the Apple II. Then it reinvented the PC in the 1980s with the Macintosh.
Co-founder Steve Jobs returned to run Apple in 1997 and oversaw a winning streak of innovations that included the iMac, iPod, iTunes, iPhone, iPad and the App Store.
The biggest driver of Apple’s modern success is the iPhone. The game-changing smartphone, which debuted in 2007, sparked years of massive growth and created a loyal base of customers willing to buy Apple products and services.
But iPhone sales have slowed as users hold on to their handsets for longer periods between upgrades. However, the company is in the midst of a major upgrade cycle with its 5G iPhones.
Apple Stock News: WWDC News
On June 6, Apple showcased features of its upcoming operating systems for iPhone, iPad, Mac and Apple Watch at its Worldwide Developers Conference. It also unveiled a second-generation Mac processor, M2, which will be available next month in two new laptops, the MacBook Air and MacBook Pro.
Apple stock ended the day up 0.5% on the news. Some Wall Street analysts were underwhelmed by the surprise-free event. They expected at least hints about the company’s rumored mixed-reality headset.
Earlier this year, on March 8, Apple held a spring product launch event where it introduced a lower-cost 5G iPhone. The third-generation iPhone SE is the company’s new entry-level 5G smartphone. It starts at $429.
The new iPhone SE handset joins the company’s second-generation 5G-enabled smartphones, the iPhone 13 series. Those smartphones debuted last September.
At the spring launch event, Apple also showed off a new high-end Mac computer for creative professionals. The Mac Studio desktop computer starts at $1,999. Plus, Apple introduced a new version of its iPad Air tablet.
But investors were unimpressed. Apple stock fell 1.2% on the day of the event.
Apple Opportunities For Growth
With the iPhone business maturing, investors are wondering what the next big growth driver will be for Apple stock.
Lately, two businesses have given Apple’s sales and profits a boost: services and wearables.
In the March quarter, Apple’s services revenue rose 17% year over year to $19.82 billion. Services include the App Store, AppleCare, iCloud, Apple Pay, Apple Music, Apple TV+, Apple Arcade and other offerings.
In March, Apple TV+ became the first streaming video service to win an Oscar for best picture. Its movie “CODA” took the top prize at the 2022 Academy Awards.
Meanwhile, Apple is facing antitrust scrutiny in the U.S., Europe and Asia for its App Store policies, including its 30% commission fee.
Apple Product Rumors Persist
Apple’s Wearables, Home and Accessories unit saw sales increase 12% to $8.81 billion in the March quarter. This unit includes wearables like the Apple Watch, AirPods wireless earbuds and Beats headphones. It also contains the Apple HomePod Mini wireless speaker and other miscellaneous gadgets.
News leaks suggest that Apple will announce a headset for virtual reality or augmented reality later this year. The computer headset could be a driver of Apple stock, analysts say.
Meanwhile, speculation continues that Apple is looking to make a self-driving electric car.
Apple Earnings: Guidance Soft
Late on April 28, Apple easily beat Wall Street’s targets for its fiscal second quarter ended March 26. However, it warned that Covid-related shutdowns in China will negatively impact its June-quarter performance.
Apple earned $1.52 a share on sales of $97.28 billion in the March quarter. Analysts polled by FactSet expected Apple to earn $1.42 a share on sales of $94 billion. On a year-over-year basis, Apple sales and earnings both increased 9%.
In the March quarter, iPhone revenue rose 5% to $50.57 billion. Smartphones accounted for 52% of the company’s total sales in the period.
Apple’s Mac computer sales climbed nearly 15% to $10.44 billion. But iPad tablet sales fell 2% to $7.65 billion. Tablet production was impacted by chip shortages in the quarter, Apple said.
The next catalyst for Apple stock could be the company’s June-quarter earnings report, due in late July.
Exclusive Apple Stock Ratings
After hitting its record high at the start of 2022, Apple stock pulled back as much as 28%. It mostly has trended sideways in the turbulent market.
AAPL stock has an IBD Relative Strength Rating of 68 out of 99. The Relative Strength Rating shows how a stock’s price performance stacks up against all other stocks over the last 52 weeks.
Apple stock has an IBD Composite Rating of 74 out of 99, according to the IBD Stock Checkup tool. IBD’s Composite Rating combines five separate proprietary ratings of fundamental and technical performance into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.
AAPL Stock Technical Analysis
On Nov. 17, Apple stock broke out of a cup-with-handle base at a buy point of 153.26, IBD MarketSmith charts show.
For the past 23 weeks, AAPL stock has been consolidating with a buy point of 183.04. That buy point is 10 cents above its all-time high, reached in early January, based on IBD trading guidelines.
However, in a negative sign, Apple stock is trading below its 50-day moving average line. Also, it has a worst-possible IBD Accumulation/Distribution Rating of E, indicating heavy institutional selling of shares.
Is Apple Stock A Buy Right Now?
Apple stock is not a buy right now but it soon could be. It is in a consolidation pattern but could face significant overhead resistance.
Keep an eye on the overall stock market. If the market turns south, don’t try to fight the general stock market direction. Check out IBD’s Big Picture column for the current market direction.
To find the best stocks to buy and watch, check out IBD’s Stock Lists page. More stock ideas can be found on IBD’s Leaderboard, MarketSmith and SwingTrader platforms.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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