Here’s why shares of Apple are ready for their ‘next leg up’

By News Room Last updated Nov 7, 2023

Apple (AAPL) stock is poised for fresh gains once the market realizes the iPhone maker’s long-term growth prospects in China and the bullish implications of its forthcoming mixed-reality headset. Bank of America on Tuesday called out “promising” revenue figures from Apple’s business in China, while Jim Cramer also highlighted the upcoming launch of Apple’s highly anticipated Vision Pro headset at the start of next year. “I think Apple is about to have the next leg up,” Jim said earlier Tuesday, citing both the headset launch and upbeat data out of China. AAPL YTD mountain Apple (AAPL) year-to-date performance Apple’s app store revenue in China increased 10% year-over-year in October following a 10% annual gain the month prior, according to Bank of America, which cited data from SensorTower. The U.S. and China comprised the two biggest app store markets for the company, at 58% of total app revenue. Tuesday’s research note follows a slate of negative press around Apple’s standing in the world’s second-largest economy. Most notably, in September, The Wall Street Journal reported that Beijing had banned government employees from using iPhones and other foreign-branded devices at work — fueling a massive selloff of Apple stock. Chinese authorities have since denied the report, with the stock paring some of its losses. Shares of Apple are still up roughly 40% year-to-date. “Given the recent media reports on a ban of iPhones at [government] locations in China, the strong September & October app store data is promising for Apple,” Bank of America analysts wrote in a note Tuesday. The firm cited positive catalysts that include “new product introduction and stable iPhones.” Still, the analysts warned that those positives could be offset “by a potentially weaker consumer spending environment.” But we see the data as a further sign that Apple remains an aspirational brand for Chinese consumers. Its closed ecosystem, product quality and pricing set it apart from peers like China’s Huawei. China accounts for roughly 19% of Apple’s total revenues. Though, the company has also been investing heavily in India to grab market share in the world’s most-populous nation and diversify its supply chain away from China. At the same time, the Vision Pro launch should provide Apple with another catalyst. The high-quality product — tested personally by Jim in July — will help further diversify Apple’s revenue streams, giving it an edge over many of its Big Tech competitors. The company said the headset will be available starting around $3,500 from early next year. “People don’t realize that [the Vision Pro] is a [business-to-business] situation,” Jim said on Tuesday. “There are companies that are going to use it and then we are going to use it,” he said of individual consumers. (Jim Cramer’s Charitable Trust is long AAPL. 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. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Tim Cook, chief executive officer of Apple Inc., holds an iPhone 15 Pro Max during an event at Apple Park campus in Cupertino, California, US, on Tuesday, Sept. 12, 2023.

David Paul Morris | Bloomberg | Getty Images

Apple (AAPL) stock is poised for fresh gains once the market realizes the iPhone maker’s long-term growth prospects in China and the bullish implications of its forthcoming mixed-reality headset.

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