Apple (AAPL -0.48%) hasn't had the easiest 2023, with its stock falling 12% since the start of August. Three consecutive quarters of revenue declines have concerned investors as the company continues to fight against macroeconomic headwinds.
Businesses across tech are dealing with similar challenges, with U.S. smartphone shipments decreasing by 24% year over year in the second quarter of 2023 and global PC shipments tumbling 13%.
However, Apple has a long history of offering investors consistent gains, making its recent stock dip a potential buying opportunity. The company's dominance in tech could help its shares soar once market challenges subside. As a result, now is an excellent time to learn more about this tech giant and consider a long-term investment in the stock.
Here's one green flag and one red flag for Apple in 2023.
Green flag: Signs of high demand for the newest iPhone
Apple's iPhone 15 hit stores on Sept. 22, offering upgraded cameras, a charging port change to USB-C, various software updates, and more. iPhone revenue declines in the first half of this year had many analysts bracing for a poor launch. However, data from Counterpoint Research suggests the opposite is true.
In the U.S., the wait time for the base model iPhone 15 is 10 days, almost double what it was last year when the iPhone 14 was released. Meanwhile, the most expensive model seems to be a hit. Shoppers currently need to wait 48 days for the iPhone 15 Pro Max, when last year's version had consumers waiting 39 days.
In China, wait times for the base model have quadrupled from last year despite growing competition from Huawei. Counterpoint attributed part of the high demand to Apple's trade-in program, which has reduced "psychological barriers for those contemplating a new phone purchase" and is an "increasingly vital contributor to Apple's market dominance."
In Apple's most recent quarter (Q3 2023), revenue declined in three of its four product segments, with iPhone revenue slipping 2% year over year. As a result, signs of strong demand for the iPhone 15 are promising and could signal a return to form for the company.
Red flag: Repeated revenue declines
Apple's revenue slipped 1% year over year in the three months ending in July 2023 and 3% in the previous nine months. The company suffered from sales declines in its iPhone, Mac, and iPad segments, with the last hit the hardest after a 20% dip in sales.
Apple's leading market share in multiple product categories has made the company especially vulnerable in an economic downturn. However, it also means it could have more to gain from the market's eventual recovery.
In the meantime, Apple is showing its resilience by continuing to deliver significant profits. In Q3 2023, operating income stayed almost equal to the year-ago period, hitting $23 billion despite revenue declines. The company is benefiting from its strategically diverse earnings streams as it leans more on its services business amid poor market conditions.
Apple's services segment includes income from the App Store and subscription services such as Apple TV+, Music, and iCloud. The digital business has become the company's second-highest-earning segment, with profit margins of about 70%. Comparatively, product profit margins often hover around 35%.
Services have proven their strength over the last year, regularly beating the iPhone in revenue growth. In fact, services reported the most growth in Q3 2023, with revenue rising 8% year over year.
Apple has been in a tight spot this year, delivering dismal earnings results quarter after quarter. However, its market dominance is still worth a long-term investment. The company could be on track for a recovery in 2024 with high demand for the iPhone 15. Meanwhile, its booming services business has strengthened its financial future.
With Apple shares down 12% since Aug. 1, it could be a smart move to buy the dip before the stock starts trending upward.
