It’s no secret that Apple has had a rocky start to 2024. A slew of cautious analyst commentary, regulatory hurdles, and soft iPhone sales in China have knocked down the stock and investor sentiment with it. However, two new research reports show why investors should stick out the pain — and “own, not trade” the Big Tech name. Evercore ISI argues that Apple’s year-to-date losses are “overdone,” and shares have several tailwinds ahead. Bank of America says the iPhone continues to grab share in the broader smartphone market despite China sluggishness. It’s not just recent data on China’s troubles, European regulators earlier this month hit Apple with a big antitrust fine over its music streaming efforts. Shares have tumbled around 10% in 2024 versus the S & P 500′ s more than 8% gain over the same period. The stock has lagged even more compared to other mega cap names. Club holdings like Nvidia and Meta Platforms have surged 82% and roughly 40%, respectively, since the start of the year. Even Alphabet — beset with artificial intelligence missteps — has been flat in 2024. The Club’s other two Super Six stocks — Amazon and Microsoft — have gained 15% and 10%, respectively, year to date. The Club did make a small sale of Apple on Jan. 2 to right-size the position , which grew too large for our portfolio diversification goals. The trade was part of an eight-stock trim of 2023 tech winners. AAPL YTD mountain Apple (AAPL) year-to-date performance Jim Cramer on Tuesday acknowledged Apple’s recent woes but encouraged investors to have “patience, patience, patience,” with the stock. The tech name is “one of the greatest performers of all times,” he said back on March 4. In fact, he said at the time, shares could tumble to $160 apiece — which would be 7.5% lower than Tuesday’s opening price — and he still wouldn’t sell. Once concerns surrounding the company’s China market subside and its AI-integrated iPhones finally arrive, Jim sees more upside for shares long-term. Apple’s China sales — amounting to nearly 20% of overall revenue — continues to weigh on the company due to the country’s tepid consumer spending, along with stiffening local smartphone competition . “I continue to believe as long as China has a pall cast over it … we’re not going to be able to make a lot of headway,” Jim said during the Club’s Morning Meeting on Tuesday. “Own it, don’t trade it, in part, because it’s only a matter of time before China reignites.” But, he thinks a China recovery likely won’t happen in 2024. Bank of America, however, shared a more upbeat view of iPhone sales. In a Tuesday note to clients, the analysts pointed out that the flagship Apple device notched 18.8% total unit share of the smartphone market in 2023, up from 18.7% of share in the prior year. “Despite slower unit sales, Apple has been able to drive the mix of units to higher value, which in our opinion will continue as a long-term trend, thereby offsetting some of the potential unit weakness in China,” the analysts wrote. In a separate note, Evercore ISI on Monday shared more reasons to stay long on Apple, outlining three key upside drivers for the stock. The analysts said AI integration, capital allocation, and an underappreciated Service business could push shares higher moving forward. “As AI enabled tools become more mainstream, we think there will be a strong value proposition to run AI on the edge (inferencing). The advantage of doing on the edge (iPhone) would be lower latency, better security and easier/cheaper accessibility,” the analysts wrote. “We think AAPL’s AI strategy will focus on incorporating on-device inference for LLMs (large language models) that will substantially uplift the user experience for not only the iPhone but also Mac/iPad.” The Club has been most interested in Apple’s forthcoming AI-enabled offerings as a catalyst for the stock. It could drive a big upgrade for the next iPhone. To be sure, Jim said the new iteration of the device may not have enough AI for consumers’ tastes, but that doesn’t mean future efforts won’t drive long-term gains . More good news: CEO Tim Cook recently said Apple will see “incredible breakthrough potential for generative AI, which is why we’re currently investing significantly in this area.” He added, “Later this year, I look forward to sharing with you the ways we will break new ground in generative AI.” Investors are hoping to hear more about Apple’s AI ambitions at the company’s annual Worldwide Developers Conference in June. (Jim Cramer’s Charitable Trust is long AAPL, NVDA, META, AMZN, GOOGL, MSFT. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. 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Customers crowd an Apple store during the first day of sale of the iPhone 15 series smartphones on September 22, 2023 in Shanghai, China.
Wang Gang | Future Publishing | Getty Images
It’s no secret that Apple has had a rocky start to 2024. A slew of cautious analyst commentary, regulatory hurdles, and soft iPhone sales in China have knocked down the stock and investor sentiment with it. However, two new research reports show why investors should stick out the pain — and “own, not trade” the Big Tech name.