Apple stock could get a boost from the iPhone 14

New York ( Business) — Apple shares have lost value this year. Stocks are down more than 10% so far in 2022, with Apple trading about 15% below the all-time high it hit in early January.

But with new iPhones due to be revealed this Wednesday, will expectations of strong holiday sales — and all the subscription revenue that comes with that — be enough to turn Apple stock from red to green?

Apple (AAPL) has had a recent boost. The shares have risen more than 7% in the past three months. It’s also worth noting that Apple isn’t doing as badly as the broader market and the rest of the tech giant stocks. Investors are finding comfort in Apple’s steady earnings growth and strong balance sheet, even in these tumultuous times.

The S&P 500, for example, is down nearly 18% this year, while Facebook owner Meta Platforms; Amazon (AMZN); Netflix (NFLX), and Google parent Alphabet (GOOGL), have been hit particularly hard. Amazon and Alphabet are each down nearly 25% in 2022, while Meta and Netflix are down more than 50%.

Investors appear to be betting that the new batch of iPhones will lead to solid earnings gains for Apple.

Analysts are forecasting earnings per share increases of nearly 9% for this fiscal year and about 6% for 2023, respectable returns for a company as large as Apple. The tech giant is expected to generate $392.5 billion in sales this year and Apple is the world’s most valuable company, with a market capitalization of $2.5 trillion.

The company makes a lot of money from a new line of iPhones as existing customers upgrade and some holdouts switch from their Android devices. Apple also makes a lot of money from its lucrative services unit, iCloud subscriptions, Apple Music, Apple TV+, and other perks for iPhone, iPad, and Mac users.

“All the hype around the iPhone 14 refresh cycle should help Apple in the short term,” said Jordan Kahn, chief investment officer at ACM Funds. Kahn is an owner of Apple in ACM Dynamic Opportunity Fund.

An analyst believes that more iPhone users than usual will be looking to get a new device after this launch. That’s because many customers seem to have held on to iPhones for longer periods of time before getting updates. (This reporter has stubbornly kept his old iPhone 8 Plus, in part out of fear of losing the home button.) The release of new devices may prompt those users to eventually upgrade.

Wedbush Securities analyst Daniel Ives noted in a report that Apple’s initial order of 90 million iPhone 14 units is roughly flat compared to what it had ordered for the iPhone 13, even with “cloud building macro storm. So Apple clearly still expects its devices to sell even as consumer spending slows down overall.

“This speaks to the underlying demand story that Apple anticipates for this upcoming iPhone release with our estimates that 240 million billion iPhone users worldwide have not upgraded their phones in over 3.5 years,” Ives added.

Apple also benefits from the fact that it is a stock that is loved not only by individual investors, but also by Wall Street giants.

According to research from Goldman Sachs market strategists, Apple was a top mutual fund and hedge fund choice at the end of the second quarter, along with other large-cap tech companies including Amazon, Nvidia (NVDA), and Tesla. (TSLA).

Apple is that rare beast, a stock that’s still exciting enough for the crowd but also attractive to value investors thanks to its reasonable price, a penchant for buying back shares to boost earnings, and an ever-growing dividend. .