The tech giant's revenue has declined in five of the past six quarters, and the stock's recent gains reflect deteriorating investor sentiment.
Only two of the “Magnificent Seven” stocks have delivered negative returns so far in 2024: tesla and apple (AAPL 0.02%). Apple shares are down just 1.5% as of this writing, but the company's latest financial results suggest further losses may be on the horizon.
Apple's growing challenges
Apple is one of the most innovative companies in history. From the iPad to the iPhone, the company has been conducting masterclasses in developing hit consumer electronics for decades.
But it's the lack of innovation that has hurt the company the most in recent years. The company introduced its Vision Pro virtual reality headset earlier this year, but demand has been weak as consumers have cheaper alternatives. meta platform.
For quite some time, Apple's main source of growth has been the iPhone, as consumers choose to upgrade to the latest and greatest models. Unfortunately, this strategy hasn't been working well lately.
Over the past 18 months, the economy has been plagued by high inflation and rising interest rates. The current inflation rate of 3.4% is much lower than the peak inflation rate in 2022, but still much higher than the US 10-year average and above the Federal Reserve's long-term goal of 2%.
Data by YCharts.
Prolonged inflation and high borrowing costs have combined to negatively impact consumer purchasing power. This is evident from Apple's performance as customers are not upgrading their hardware devices.
Image source: Statista
The graph above shows that iPhone sales, Apple's main source of revenue, are shrinking. To make matters worse, revenue in the key Chinese market fell 8% in the most recent quarter. In addition, sales of iPads and wearable hardware devices (such as the Apple Watch) also declined.
If this isn't enough to cause concern, Apple has been suspiciously silent on its artificial intelligence (AI) roadmap. All the big tech companies are already moving into the AI space, and Apple seems to be left behind.
Given the combination of these bearish signals, we don't think Apple is the best opportunity for growth investors right now.
Randi Zuckerberg is a former head of market development and spokesperson at Facebook, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool's board of directors. Adam Spatacco has held positions at Apple, Meta Platforms, and Tesla. The Motley Fool has positions in and recommends Apple, Meta Platforms, and Tesla. The Motley Fool has a disclosure policy.
