As investors, we are constantly looking for opportunities to capitalize on market trends. Apple, a tech giant that needs no introduction, has been experiencing a rough quarter with a drop of nearly 10% in the first three months of the year. However, history and Wall Street analysis suggest that there may be a bounce ahead for the company.
Despite recent challenges such as a lawsuit from the Department of Justice and concerns about iPhone demand in China, there are reasons for optimism when it comes to Apple’s future performance. Wall Street analysts are still bullish on the stock, with nearly two out of every five analysts rating it as a buy. The average price target implies a bounce of more than 15%, according to FactSet.
One key factor that could drive Apple’s stock price up is its potential entry into the artificial intelligence (AI) space. Analysts believe that if Apple can successfully break into this market and find ways to monetize it, the stock could see significant gains. This is something market participants are eagerly anticipating, with many expecting news during Apple’s developers conference in June.
Mahoney Asset Management CEO Ken Mahoney sees Apple as a “controversial” pick given its recent challenges, but believes that the stock could test all-time highs if it can successfully navigate the current obstacles. Mahoney recommends buying on weakness, as he believes Apple has one of the best management teams in the world.
Melius Research analyst Ben Reitzes is even more bullish, expecting the stock to rally almost 27% and reach a new record high of $220. Reitzes’ outlook depends on Apple’s ability to break into the AI space and deliver a new narrative in that area.
While some analysts anticipate more modest gains for Apple, historical data suggests that after quarters where the stock dropped at least 10%, it tends to rebound in the following months. In fact, over the past 20 years, Apple has been positive in nine out of the 14 quarters analyzed, with shares jumping more than 14% in the median quarter following a loss.
Overall, the outlook for Apple seems to be positive, despite the challenges it has faced in recent months. As investors, it’s important to keep an eye on developments in the AI space and any announcements from the company that could drive future growth. With a strong management team and a track record of resilience, Apple could be a stock worth considering for those with a longer time horizon and a willingness to ride out short-term fluctuations in the market.
