Selling Apple And Replacing It With SPY (NASDAQ:AAPL)


Apple Inc.‘s (NASDAQ:AAPL) investors have gotten used to attractive returns over the course of the last two decades as the company stayed at the forefront of technological innovations, delivering massive 25.6% EPS growth annually since 2003.

Since then, the stock is up more than 65x, confirming American engineering ingenuity, fueling one of the major success stories of the 21st century.

While I do not want to be short-sighted, it does appear the company has recently hit a wall with the stock being up only 3.5% in a span of 12 months, even though the AI narrative is pushing other major tech stocks higher.

The lackluster performance, pushed Apple’s market cap down to $2.56T, falling behind Microsoft Corporation (MSFT) which is riding the AI tailwinds and is once again the most valuable company with a market cap of $3.15T.

In face of Apple’s challenges, I am downgrading the stock to “Sell” with execution risks going forward as the company does not have a major product breakthrough to drive its top-line growth and rich valuation not being justified, despite its high quality and superior profitability.

Business Update

Apple’s poor performance is not a result of market sentiment, instead the company is being hit by:

  • iPhone’s potential (58% of NS) has reached its peak and product maturity.
  • Weak sales and declining market share in China.
  • Abandoning autonomous EV project after spending an estimated $10 billion.
  • Falling behind in the AI strategy/race.
  • VisionPro may not be the next “big-thing”.
  • US Justice Department lawsuit on violating antitrust laws.

There is a lot to worry about for Apple, even though the company has overcome major challenges in the past with its great leadership, yet moving the needle for a company with annual revenue of close to $400B might be more challenging this time, without having

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