Apple Stock: Riding High or Due for a Dip? A Value Investor’s Perspective Q4 2024

It’s time to spotlight one of the cornerstone companies in my portfolio—a tech giant that has long dominated investors’ watchlists. Until recently, it was the largest company in the S&P 500. Let’s dive into Apple.

Apple surprised the market by reporting record-high financial results for Q4 2024 (ending September 28, 2024), with revenue hitting $94.9 billion, a 6% increase year-over-year. This performance defied expectations, fueled by the launch of the iPhone 16 lineup, packed with innovative features and the introduction of Apple Intelligence.

Many investors were caught off guard, as sentiment around Apple had turned cautious. Concerns about the company’s growth potential were mounting, especially amid global political challenges. Governments worldwide have been ramping up efforts to tax foreign products, while China has been tightening restrictions on Apple’s market presence, citing privacy and AI content moderation concerns.

Apple’s Balancing Act: Navigating China and Europe

Before we explore these challenges in detail, let’s first take a closer look at Apple’s net sales by reported segments over the past three years.

I’ve created an interactive chart that’s best viewed in a web browser like Chrome, Firefox, or Safari. Since email clients can’t display dynamic content, check out the live chart on our website to uncover deeper insights into Apple’s performance!

Looking at Apple’s net sales in Greater China, it’s clear that the company faces significant challenges. While sales in major quarters like Q1 have dropped noticeably, other quarters, including Q4, have shown more stability with only slight declines over time. This reflects Apple’s strategic decision not to push back against China’s stringent regulations. With China accounting for one-fifth of Apple’s sales and producing a large share of its devices (though some production has shifted to India and the U.S.), resistance would be costly.

However, Beijing isn’t making things easy. Every time CEO Tim Cook steps back to comply with regulatory demands, the Chinese government seems to expect even more concessions. The big question remains: How long will Apple choose accommodation, and how long will Chinese consumers continue choosing Apple over domestic rivals like Huawei?

Meanwhile, Apple’s relationship with Europe tells a different story. Despite increasingly strict EU regulations, Apple has steadily expanded its market presence there. Interestingly, the company has taken a unique approach by delaying some software features in Europe, attributing the delays to regulatory challenges. This seems like a calculated move to shift consumer pressure onto EU regulators.

Apple’s strategy in these two key regions highlights the delicate balance between compliance, competition, and customer loyalty. It’s a game worth watching closely.

Shifting Focus Beyond the iPhone

Let’s take a closer look at Apple’s sales by product category. As many investors have already realized, it’s hard to imagine Apple launching another groundbreaking product on the scale of the iPhone. It’s not for lack of trying, but consumer adoption of Apple’s (other tech giants have the same problem) newer products hasn’t yet reached the same iconic status.

That said, Apple’s future looks promising with its lineup of “affordable luxury” products like wearables, the MacBook Air, and the Mac mini. These devices have been well-received and are likely to continue driving revenue growth.

We can also see Apple gradually shifting its business core from hardware like the iPhone to services. This appears to be Tim Cook’s long-term strategy: making Apple Services the key reason customers stay loyal to the brand. The seamless integration of devices and services—where a new Apple device instantly feels like “your own” through automatic syncing—is a powerful incentive for consumers. It turns the high price tag into a convenience many are willing to pay for.

Apple’s ecosystem might just be its most valuable product of all.

Where Does Apple’s Stock Price Stand Today?

The big question on every investor’s mind: where does Apple’s stock price sit right now? At the time of writing, Apple is trading near its all-time high of $242 per share, which, in my view, seems a bit overvalued. However, many investors are already placing their bets on Apple’s upcoming Q1 2025 revenue.

Historically, Q1 has been Apple’s strongest quarter, and Wall Street is optimistic that the next one could be the company’s best yet. With a refreshed product lineup and Apple’s new AI features exclusive to its latest devices, it’s not hard to see why expectations are so high.

As a long-term value investor, I believe the current price is stretched, and I prefer to wait for a better entry point. Apple’s stock has historically provided attractive dips, offering patient investors great buying opportunities. Let’s not forget that its 52-week low was around $160, and in January 2023, shares were even available for as low as $120.

Sometimes, patience can be the best investment strategy.