A stock market sell-off in 2022 caused Apple's (AAPL 0.06%) stock to fall 27% throughout the year. The tumble was driven mainly by macroeconomic headwinds, which reduced consumer spending and led tech stocks to fall out of favor with Wall Street.
The market has enjoyed a surge in 2023, with Apple shares up 24% year to date. However, recent reports that the company's personal computing sales are falling could prompt a short-term dip, and make it an excellent time to buy.
Here's why Apple's stock is a screaming buy after a sell-off.
PC market declines haven't let up, but that's not a reason to avoid Apple
The PC market experienced steep declines in 2022, hurting companies across the industry. With inflation showing signs of easing in recent months, many analysts have thought the market would begin recovering this year. However, an IDC report published on April 9 revealed that PC sales continued to slip in the first quarter of 2023, with shipments falling 29% year over year. What's more, while Apple's rivals Lenovo, HP Inc., Dell, and ASUS experienced PC shipments declines between 24.2% and 30.3%, the iPhone company's shipments decreased over 40%.
The report led Apple shares to begin trending down, falling around 2% in the first few hours of the market's opening on April 10.
While a stumble in PCs is concerning for Apple's Mac segment, it isn't particularly damning for the company's long-term success. The company's home-grown computer chips, dubbed Apple Silicon, perform far better than the competition. In battery life alone, Apple's M2 chip provided between 50% and over 100% more battery life than competing versions from Dell and Asus. The company's edge primarily stems from the complete control it has over its chip production, while its rivals rely on suppliers such as Intel and AMD. As a result, Apple's outperforming chips and Macs will likely allow it to surpass its rivals over the long term.
In the meantime, Apple's revenue diversification makes it well-equipped to sustain its business until market headwinds subside. In fiscal 2022, the company's Mac business was responsible for about 10% of all revenue, being the fourth-largest segment.
Moreover, reductions in Mac shipments don't necessarily mean a massive drop in revenue. The company charges a premium for its brand and quality products, making it more protected against market challenges than its peers. In January 2023, Apple launched the 14-inch and 16-inch MacBook Pro models, which are larger, more powerful, and more expensive than their 2022 predecessor. The same month also saw the tech giant release beefier versions of its desktop line of Mac Minis, which now includes a $1,299 version, when the most expensive base model was previously $899.
Apple's Mac segment is an essential part of its business model. However, with solid growth still coming from its larger segments, such as digital services, it's worth buying a dip in its stock price, as PC market declines won't last forever.
A sell-off creates opportunity
Apple is home to a potent brand that has led it to gain leading market shares in smartphones, tablets, smartwatches, and headphones. The company's success has allowed it to enjoy stock growth of 278% over the last five years and achieve the largest market cap in the world.
Consequently, a short-term dip in its stock is the time to buy. Investing mogul Warren Buffett had a similar view in 2022, with his holding company Berkshire Hathaway increasing its stake in Apple by 4% in Q1 and Q2 2022 amid a drop in its stock price. The iPhone company is by far Berkshire's biggest holding, with its immense brand loyalty and popular products making it a consistently growing investment.
Apple shares are currently down 5% for the year, but that figure could grow over the next few days as news about the company's decline in Mac shipments continues to spread. If that's the case, the company's stock will be a screaming buy. However, even if it doesn't see a substantial dip, Apple remains a stock you can buy and hold indefinitely as it gradually grows.
