While the rest of the market has been ticking higher over the past few weeks, shares of Apple Inc. (NASDAQ: AAPL) are still under pressure. They managed to rally hard throughout August, undoing most of the damage from the market-wide selloff that took them down 17% at the start of the month, but crucially, they didn’t get back to their previous high.
Other big tech names like Netflix Inc (NASDAQ: NFLX), for example, have managed to close at a new record in the past few weeks, and Apple’s lack of forward momentum is a cause for concern. To be fair, this situation is shared by many of their peers as we head into Q4.
For example, Alphabet Inc (NASDAQ: GOOGL) and Amazon.com Inc (NASDAQ: AMZN) are also struggling to get their uptrends going again, as are NVIDIA Corporation (NASDAQ: NVDA) and Micron Technology Inc (NASDAQ: MU), which dominated the headlines for the first half of the year. However, there are several reasons why Apple could be one of the top performers in the coming months.
Apple's Strong Underlying Performance
For starters, Apple topped analyst expectations for their Q3 earnings last month, delivering their best-ever revenue print for that quarter. And as investors reset their expectations on the artificial intelligence (AI) market and opportunities heading into 2025, Apple is emerging as a clear favorite.
Citi recently named them ahead of NVIDIA as their top AI-related stock pick for the coming year, which is an incredible label to be emerging from the first AI bull run with.
Citi isn’t alone either in their bullish outlook for Apple, with Morgan Stanley just last week naming Apple at the top of its vintage values pick for 2025. The team there took the broader market and macro trends into consideration and concluded that small caps are to be avoided in the near term, recommending instead that investors focus on large or mega-cap growth stocks. They gave Apple a price target of $273, which, considering Apple shares closed out Monday below $220, points to a targeted upside of around 25%.
Bullish Outlook on Apple as AI Adoption Grows Across Ecosystem
Dan Ives over at Wedbush went one better and gave Apple stock a $285 price target last week, which would require a 32% rally from Monday’s closing price. His thesis is based around the company’s iPhone 16 launch, which he said is “all about Apple intelligence and the unleashing of the consumer AI Revolution through Cupertino.” He estimates that around 20% of global consumers will be accessing and interacting with AI apps via Apple’s ecosystem within a couple of years and that the company could easily sell more than 240 million iPhone units by next year alone.
There are some market-wide concerns to be conscious of, not least the wider softening that’s been seen across equities and the tech industry in particular. The benchmark S&P 500 index closed last night just below August’s high, which itself was only a few points under July’s record high. That puts it in dangerous territory, though, as a failure to deliver a clear breakthrough here would form a bearish triple-top pattern. Considering that many of the names that sent the market to highs throughout the first half of the year have been struggling in recent weeks, it’s hard to see where the next phase of the rally will come from.
Why Now Might Be the Time to Get Involved With Apple Stock
But perhaps that’s where the opportunity is for stocks like Apple. There are enough reasons to be bullish on the stock regardless of the wider market conditions, and any weakness only lends itself to the buying opportunity and the risk/reward profile.
Investors thinking about taking advantage of this should watch for shares to remain above $200 and ideally show some consolidation in the coming weeks. If Apple can shake the bears loose, then there’s every reason to think the bulls will come storming back in to take the stock back to highs before Christmas.
