Apple (AAPL -0.20%) is one the world's largest publicly traded companies, with a market cap of $3.7 trillion and it continues to attract investor attention as it slowly steps into new areas of innovation, like artificial intelligence (AI).
The tech stock easily outpaced the S&P 500 over the past three years, gaining 37% compared to the index's nearly 24% gains (as of this writing). Still, given its already massive size, some investors will wonder if this giant has enough innovation left to continue putting up impressive returns. So let's take a look at the case for buying, holding, or selling Apple this year.
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Is there a case for buying Apple?
Apple offers investors an opportunity to ride some of the biggest tech waves, such as (like AI) without as much of the risk of the types of big share price swings some smaller stocks experience. Apple introduces new features and services methodically. It often takes a slower approach than some rivals, but ultimately benefits immensely from using this approach.
For example, Apple launched several new services (Apple Arcade, Apple TV+, Apple News+, and Apple Card) in 2019. In the first nine months of 2024, its services segment brought in $96 billion in sales.
However, skeptics have accurately pointed out that Apple hasn't introduced a new must-have device with mass appeal in years. Adding to the case against buying Apple is that its stock is relatively expensive right now, trading at a forward price-to-earnings ratio of 33.6, compared to the S&P 500's forward ratio of 23.4.
I don't think it's a terrible idea to own Apple if you're looking for a slow-growth tech giant that still has the potential to introduce new products and services, but you're probably not missing out on too much potential right now if you opt to not buy the stock.
The case for holding Apple
I already own some Apple stock, so I've thought plenty about the case for holding onto it. While there may not be a compelling case for some investors to buy Apple now, I think there's one reason it's worth keeping them in your portfolio: artificial intelligence.
The industry is in the early stages of the artificial intelligence era, and Apple could eventually benefit from the technology. It recently introduced Apple Intelligence on its latest devices, a suite of tools and services that helps users with an array of tasks such as writing emails, summarizing notifications, and keeping track of their appointments. Apple's AI can even hand a user's query off to ChatGPT if it can't handle a request itself.
It's still unclear how Apple will make money from this, aside from giving users a new reason to upgrade their old iPhones. Apple might also eventually wrap its AI into its services subscription, charging people for access to the most advanced features. There has also been some chatter around the idea that Apple Intelligence could eventually be paired with a user's choice of an AI chatbot such as ChatGPT, Gemini, or Claude, and that Apple would then take a cut when its users upgraded to a premium AI service.
The point is that Apple rarely gets left behind over the long haul when it comes to new market opportunities, so I'm holding onto some of my Apple stock to see where the company goes with its AI pursuits.
The case for selling Apple
When it comes to the question of whether or not you should sell Apple, the answer will in part be personal to each investor.
There are a few standard legitimate reasons for selling any stock:
- The investment thesis you had for the company when you bought the stock no longer applies.
- The company is being acquired.
- You need the money.
- You want to rebalance your portfolio.
- You've identified better investment opportunities.
Though I would keep some shares, too, I've considered selling some of my Apple shares for the last reason on that list. I'm bullish about Apple benefiting from AI, but there are clearly many fast-growing tech companies that are benefiting much more from it right now.
If you own some Apple stock, take a look at the list above and ask yourself if any of those reasons apply to your personal investment strategy. Aside from the company being bought (which Apple certainly isn't in danger of), the reasons for selling will mostly come down to personal preferences based on your investment strategy and financial needs.
