Investors may be a little hesitant to take it a step further Apple (NASDAQ: AAPL) at this moment. Not only have the company’s revenues and profits remained relatively stable since 2022, but the stock’s continued gains during this period have also increased the risk of a pullback.
If you’re on the fence about a new stake in the iPhone maker, you might just want to hold your nose and dive in anyway. While the stock is expensive and there hasn’t been any growth in some business segments lately, there’s still a lot working in this consumer tech titan’s favor. Four factors stand out from the rest.
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At the beginning of this year, the last time the company announced this number, there were more than 2.2 billion Apple-made devices in use worldwide. The vast majority of these are likely iPhones, although it stands to reason that fans of the popular smartphone will also opt for other iOS devices that allow for a fairly seamless user experience.
That doesn’t make the iPhone the most popular mobile device in the world – not by a long shot. Data from GlobalStats shows that today there are more than twice as many Android devices in use worldwide as there are Apple operating systems.
However, don’t let this smaller range fool you. While the number of users at Apple may be smaller, these users are much more active users of their devices. They are also bigger spenders. Recent figures from Sensor Tower suggest that iOS users collectively spend more than twice as much as Android users, meaning that iOS users spend four times as much per person in an effort to get the most out of their mobile devices. Additionally, iOS app spend rose 13% year over year in the second quarter, easily outpacing Android spend growth. And continuation of an established trend.
This continued progress is obviously an indication of how ‘sticky’ Apple’s digital ecosystem is. Once people start using it, they want to use it more and more.
And this tenacity has value beyond the continued growth of Apple’s services revenue. Although actual sales growth (measured both per unit and per revenue) is currently zero, the company’s flagship product has a large number of repeat buyers. Bloomberg Intelligence reports that Apple’s consumer loyalty rate is above 90%, compared to just 80% for Android. This matches similar data from Consumer Intelligence Research Partners, which shows that more people are likely to switch from an Android device to an Apple-made device, rather than the other way around.
Once again, it’s a testament to the power of Apple’s digital ecosystem. Users don’t want to give up all their app purchases and their familiarity with iOS.
While the iPhone has been a workhorse for Apple since its debut in 2007, there’s no denying the company has come a bit. at depending on the popular smartphone. It now makes up about half of Apple’s revenue.
However, before you jump to the conclusion that the company is simply sitting on its hands, you might want to take a closer look. It’s working on new products and profit centers that matter.
Take the Arm-based A18 processor chip that Apple designed for its AI-enabled iPhone 16. While its initial use will power the built-in artificial intelligence features of these latest smartphones, the company is reportedly looking to deploy this technology in data centers, putting Apple in a business it has never been in before. While it remains to be seen what this business could look like for Apple (assuming it gets there at all), the prospect is credible.
Let’s also not forget that Apple is still tinkering with augmented reality glasses and glasses, and even though it pulled the plug on the project early this year, it was still willing to invest time and money into electric vehicles in the hope they would be worth it. It. Encouragingly, CEO Tim Cook recognizes that some projects simply won’t deliver and are worth abandoning, even after millions have been invested. It frees up resources for promising prospects.
Finally, go ahead and dive into Apple stock despite its recent strength simply because the company’s name still carries enormous cachet. Kantar’s 2024 BrandZ report places the value of Apple’s brand name above all others and reflects brand consultancy Interbrand’s view that Apple is once again the best global brand in the world.
So what? In itself it doesn’t mean much: brand names only don’t pay the bills. All businesses ultimately need to generate revenue that turns into profit.
However, being able to leverage the most powerful brand name in the world is a clear competitive advantage. Consumers might not be as interested in hanging on to the iPhone if it weren’t some kind of status symbol — just as ChatGPT developer OpenAI might not have been as interested in integrating its technology directly into newer iPhones if Apple had been a different consumer . technology name.
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James Brumley has no position in any of the stocks mentioned. The Motley Fool holds and recommends positions in Apple. The Motley Fool has a disclosure policy.
4 Reasons to Buy Apple Stock Like There’s No Tomorrow was originally published by The Motley Fool
