Investing in Apple: Is it still a wise choice?
Apple has long been known as a powerhouse in the tech industry, but according to New York University’s Aswath Damodaran, the company is no longer the growth engine it once was. Despite this, Apple remains a top income generator, with Damodaran referring to it as the “greatest cash machine in history.”
While Apple has returned over $600 billion in cash over the last decade, recent reports of softer demand for the iPhone 16 model have caused some concern among investors. The stock saw a 2.8% drop following news that first-weekend orders were down compared to the previous year. One contributing factor to this decline is the delayed release of Apple Intelligence, which is not available with the new iPhones and is expected to launch in beta mode next month.
Damodaran, often referred to as the “Dean of Valuation,” believes that Apple will continue to face challenges in its services business as it tries to offset declining iPhone sales. However, he also notes that Apple shares are reasonably priced, with a more than 12% increase in value this year.
Despite the potential for growth in the services business, Damodaran warns that it will be difficult for Apple to make up for the immense profits generated by iPhone sales. He emphasizes the importance of the ecosystem that Apple has built and the need for it to significantly expand in order to compensate for any decline in iPhone revenue.
Considering these factors, investing in Apple may still be a viable option, but investors should be cautious and consider the company’s long-term growth prospects. As the tech giant continues to evolve and adapt to changing market conditions, it will be important to closely monitor its performance and strategy moving forward. Stay tuned to Extreme Investor Network for more updates and insights on investing in Apple and other top companies in the market.