Apple ( NASDAQ: AAPL ) has rallied 30% from a 52-week low reached earlier this year, helped by the release of strong earnings results. At the same time, the iPhone maker has been making long-term bets on areas like mobile advertising and VR.
With lingering concerns about the near-term economy, does AAPL remain a buy at these levels, as the Steve Jobs-founded company seeks to map out its future against the backdrop of a murky tech market?
More Than iPhones
In its latest earnings report, released in late July, Apple ( AAPL ) delivered a better-than-expected bottom-line result . This was helped by revenue that edged up 2% from last year, coming in at $83B.
Following the release of the financial figures, the company’s CEO, Tim Cook, laid out an upbeat near-term assessment , saying the company would see its top line accelerate. The strong quarterly report led to a positive reaction from Wall Street, with AAPL rising nearly 4% in the session following the announcement.
While shares have had trouble maintaining upward momentum since, the earnings-related bump capped a recent recovery. AAPL reached a 52-week low of $129.04 in mid-June but has been marching higher since. With the stock trading at $168.13 in Wednesday’s intraday action, shares have climbed 30% since hitting their low.
Even so, AAPL remains about 8% lower for 2022 as a whole.
AAPL has outperformed the other megacaps over the course of the year so far. Tesla ( TSLA ) has fallen nearly 27%, while Amazon ( AMZN ), Microsoft ( MSFT ) and Google ( GOOG )( GOOGL ) have each dropped between 13% and 18%.
As investors digested AAPL’s near-term results, they also looked ahead to some of the longer-term projects the company has been working on. This includes virtual reality and augmented reality investments. As part of this, TF International Securities analyst Ming-Chi Kuo predicted that a mixed reality headset could be coming out in the coming months.
Meanwhile, AAPL has been taking steps to reshape its business beyond iPhones, which remain nearly half of the firm’s revenues. The company has been building out its services revenue, accounting for offerings like iCloud and the Apple music service.
While revenues generated by product sales dipped slightly in the latest quarter compared to the previous year, services revenue climbed 12%. As such, the share of AAPL’s total sales attributable to this portion of the business increased. Services now makes up 24% of the total, compared to 21% last year.
At the same time, some analysts have pointed to the firm’s attempts to build a mobile-ad platform. For instance, Needham analyst Laura Martin spotlighted this endeavor as a possible “meaningful” driver of results for its services unit.
Even as AAPL ramps up these new ventures, the outlook for its core iPhone business remains strong. Kuo also weighed in on this part of the firm’s business, saying AAPL could raise the average selling price for the iPhone 14 by about 15% .
Is AAPL a Buy?
Wall Street generally holds a bullish outlook for AAPL. Of the 45 analysts surveyed by Seeking Alpha , 27 have issued a Strong Buy rating. Another seven have labeled the stock as a Buy.
However, there are some dissidents within the analyst community. Nine experts have a Hold rating, while two have given the stock a Sell opinion.
Quantitative measures suggest that investors should keep some skepticism. Seeking Alpha’s Quant Ratings give AAPL an A+ for profitability and an A- for momentum. However, this is moderated by a D+ for growth and an F for valuation.
For more on the bear case against Apple ( AAPL ), read a report from Seeking Alpha contributor JR Research , who advises investors “use the recovery to sell and get out once and for all.” Meanwhile, fellow SA contributor Moe Value Picks takes a bullish long-term view, weighing whether AAPL can replace Google as the world’s biggest ad company .
For further details see:Apple has bounced 30% from its 52-week low, helped by strong earnings. Is it a buy here?