As the world's most valuable company with a market cap of $2.39 trillion, Apple (AAPL 1.27%) stock might seem well past the best time to buy. However, the tech industry is made up of dozens of solid growth stocks for a reason. It's a market that consistently has one eye on the future, with many companies in a constant state of development and innovation.
So while Apple's stock skyrocketed over 117,000% since it first went public in 1980, it's not too late to invest in the tech leader. Here's why.
Apple has reliable long-term growth
Last year was challenging for the entire tech market, with the Nasdaq-100 Technology Sector index plunging 40% throughout 2022 as macroeconomic headwinds led to a decline in consumer demand. In the same period, Apple shares fell 27%, a more moderate decline than its peers, with Alphabet's stock sliding 39%, Nvidia's 50%, and Advanced Micro Devices's 55%.
Apple's stock dip in 2022 highlighted its impressive long-term growth and the importance of holding such investments through economic downturns. Despite the sell-off, Apple's stock price has still soared 286% over the last five years and 789% over the last 10 years. In fact, a $20,000 investment in Apple in 2018 would be worth $57,200 today.
The stellar stock growth has come alongside consistent earnings. In the last five years, Apple's annual revenue has risen 48% to $394 billion, while operating income increased 68% to $119 billion. The company has almost unparalleled brand loyalty, which allows its products and services segments to continue expanding no matter short-term headwinds.
Apple is always looking to the future
Numerous reports over the years suggest Apple has several secret projects in development, such as autonomous cars, mixed-reality headsets, folding phones, touch-screen laptops, and more. The tech giant has a significant market share in its current lineup of products, which includes smartphones, tablets, personal computers, and wearables, but it also keeps a keen eye on the future.
For instance, according to a Bloomberg report, Apple is expected to release an augmented/virtual reality (AR/VR) headset in 2023.The new device will see the company venture into the $25.33 billion AR market, which will likely expand at a compound annual growth rate (CAGR) of 40.9% through 2030 (per Grand View Research). Meanwhile, the VR market is expected to grow at a CAGR of 15% in the same period.
With advances in mixed reality allowing the technology to be applied to various industries in the future, from healthcare to education, Apple will be positioned to profit from the burgeoning industry.
Along with technological advancements, Apple's long-term mindset safeguards its business from potential headwinds. Recent reports have suggested the company is making moves to boost profits in its highest-earning segment, the iPhone, by using more in-house components in the future. For instance, in January, Bloomberg reported Apple has plans to lessen its dependency on companies like Samsung and Qualcomm by developing its own iPhone screens and telecom chips starting in 2024.
The change will end expensive partnerships with other tech companies, improving profit margins in the segment. And more profit per iPhone will allow Apple to keep revenue up even in the case of an economic downturn, during which it might sell fewer smartphones overall. The company has done a similar thing in its Mac business by moving away from Intel processors (CPUs) and using custom-designed versions it calls Apple Silicon. Since beginning the CPU transition in June 2020, Mac revenue has increased 62% from $7 billion to $11.5 billion in 2022. Swapping out several iPhone components in favor of custom versions could be incredibly lucrative over the long term.
It may have been 46 years since Apple's founding, but the company is nowhere near hitting its ceiling. Its consistent stock growth over the last five and 10 years reflects its potential for the future. It's not too late to buy Apple stock, and Apple is, in fact, a screaming investment.
