Should you buy Apple stock before September 9? Here’s what the evidence suggests

There is a small question Apple (AAPL 0.51%) it has been a long-term winner for shareholders. Even investors who bought the stock over the past decade have been handsomely rewarded, as Apple is up more than 800% (at the time of writing), eclipsing the 180% gains of S&P 500.

However, in the past year, Apple shareholders have had a crisis of confidence. Investors watched as many of the company’s artificial intelligence (AI) rivals and peers posted stellar gains, while Apple shares failed to keep pace with the broader index.

However, the iPhone maker is trying to change all that. Apple recently announced plans for a special event and product reveal on September 9, which could be the spark that drives the stock higher. Should investors buy Apple ahead of this high-profile event? Let’s see what the evidence suggests.

Image source: Apple.

A perfect storm

Before answering that essential investment question, it’s important to look at the issues that caused Apple investors to lose faith.

The most obvious problem for Apple has been the company’s financial results, which have been stagnant for the past two years. For the nine months ended June 29, Apple’s revenue rose less than 1 percent year over year, while iPhone sales he fell 1% The prior year was similarly challenging, as fiscal 2023 revenue was down 3%.

It is important to put these results in the context of the wider economic context. Inflation has approached 20-year highs, and consumers have been forced to make tough choices at the gas pump and in the grocery aisle. Given the economic challenges, it’s not surprising that consumers would choose to hang on to their existing iPhones a bit longer than switch to the newest model.

Another issue that has weighed on Apple’s stock is the monumental selloff by longtime shareholder and attorney Warren Buffett. The famous investor and Berkshire Hathaway The CEO has sold Apple stock for three straight quarters, offloading roughly 56% of his stock. This from the guy who just last year said, “It just happens to be a better deal than any of us.” Buffett suggested the sell-off was for tax reasons, but that didn’t stop fair-weather investors from heading for the exits.

This combination of factors has hurt Apple stock, but that could be about to change.

“Time to Shine”

Just this week, Apple announced the date for its next big product reveal, which is scheduled for September 9th at 10am PT. The invitations sent out by the company said, “It’s Glowtime.” Most industry commentators expect Apple to unveil the next generation of its flagship device — the iPhone 16 — at the event.

The image on the invitations appears to be a stylized Apple logo combined with the icon for Siri, Apple’s digital assistant. The design has fueled theories about what’s in store, and expectations are high that the update will include a much-needed update to Siri. The company is also expected to provide details on Apple Intelligence, the company’s foray into generative artificial intelligence.

This could just provide the catalyst for Apple’s next step up.

An Apple recovery?

I’m not alone in being optimistic about the potential for Apple’s sales to bounce back.

Daniel Loeb, CEO of hedge fund Third Point, recently added a sizable Apple stake to his portfolio. The billionaire amassed nearly 2 million shares of Apple in the second quarter, a stake worth about $443 million (at the time of writing) and representing nearly 5% of his portfolio. Loeb dismissed investor concerns that Apple would “be an AI loser,” suggesting that Apple Intelligence would fuel “significant demand” in the company’s installed base, driving “a gradual improvement in Apple’s revenue and earnings over the next few years.”

Veteran technology analyst Dan Ives of Wedbush is equally optimistic. As a result of the recent economic difficulties, the analyst estimates that “approximately 300 million iPhones globally have not been updated in over 4 years”. Ives goes even further, postulating that “Apple could sell north of 240 million iPhones in fiscal 2025,” part of an “AI-driven upgrade cycle” fueled by pent-up demand. With an average selling price of more than $900, that would represent more than $220 billion in iPhone sales alone, and roughly 10% growth over this year’s trajectory. Supporting his call, Ives has an Outperform (Buy) rating and a $285 price target, representing a potential upside for investors of 25% from Monday’s close.

Should Investors Buy Before September 9th?

I generally advise investors to make decisions based on data, but rather to focus on the preponderance of the evidence to decide whether or not to buy a particular stock — and Apple is no different.

Apple is the world’s most popular smartphone, with its devices accounting for the top seven best-selling smartphones in 2023, according to Counterpoint Research. Apple has over 2 billion active devices worldwide, and an estimated 1.4 billion of those are iPhones.

The potential for robust iPhone sales is clear, as are related sales of apps, services and ancillary products. The economic headwinds of the past few years are beginning to ease, suggesting that consumers will likely be more willing to upgrade to the newest iPhone. In addition, new AI-based features are a compelling incentive for consumers to upgrade.

Apple currently sells at a slight premium at 34 times earnings, which is justified given its long-term growth track record. Additionally, the trifecta of new iPhone features, a revamp for Siri and new AI-powered functionality could be just the catalyst Apple needs to trigger its next big upgrade cycle and the stock’s next move higher.

All of this suggests that Apple stock is a buy.