Apple (AAPL -3.19%) has proven itself to be a millionaire maker in the past. The tech giant, seller of world-famous products including the iPhone and Mac, has built a solid track record of earnings growth, and that’s translated into fantastic stock performance. For example, the stock has soared more than 2,900% over the past 15 years -- if you’d invested $35,000 in Apple back then, your investment today would be worth more than $1 million.
So, it’s worth owning Apple in a bull market, a time when the market is roaring higher and favoring companies focused on growth. That said, today Apple is a well-established player so it’s much more difficult for the company to deliver the double- and triple-digit growth you’ll see in younger tech peers – or in players heavily involved in a high-growth area like artificial intelligence (AI).
Considering all of this, could this bull market buy still help you become a millionaire? Let’s find out.
Image source: Getty Images.
Market-leading products
First, let’s take a look at why you might want to own Apple stock. As mentioned, the company has increased earnings over time thanks to growth of its market-leading products. In the latest fiscal year, ended in September, the company reported more than $391 billion in sales and $93 billion in net income. And the $94 billion in quarterly revenue was a record for that quarter amid strength in iPhone sales worldwide and record services revenue. Mac and iPad revenue also advanced during the period.
The key to Apple’s success is the fact that it’s created a portfolio of products that fans love -- and they’ll come back to those products even if a rival one is cheaper or a competitor releases its latest version earlier. Apple fans will wait for the latest iPhone and pay more for it. This represents a solid moat, or competitive advantage, and pricing power that’s helped Apple maintain and grow its sales over time.
Even though Apple was slower than other tech giants to adopt AI, this hasn’t stopped users from buying Apple products. In fact, they appreciate Apple’s approach to rolling out a new technology, focusing on security and privacy.
And Apple’s launch of AI features -- announced in June of last year -- may offer a boost to growth in the coming quarters as this new story develops. Apple Intelligence, as it’s called, “redefines privacy and AI” Apple chief Tim Cook said during the latest earnings call. This means that any of your personal data sent into the cloud for AI processing isn’t available to anyone else -- not even to Apple. As for features, Apple Intelligence includes an improved AI assistant, a better photos app, various writing tools, and more.
Record services revenue
Finally, another element that could drive a new wave of growth at Apple is linked to the work the company has done over so many years, building up its user base. The tech giant now has an installed base of more than 2.2 billion active devices. And most of the people who own these devices use Apple’s services. From digital content to cloud storage, these services offer the company a way to monetize each device well beyond the day the customer walks out of the store with it.
And this has helped Apple generate record services revenue quarter after quarter in recent times. It’s easy to imagine this trend continuing, and it could support more growth ahead for this tech powerhouse.
Now, let’s get back to our question and consider whether Apple still could help you become a millionaire. Of course, it’s important to keep in mind that Apple faces some headwinds. As mentioned, it may not attract as many investors as a smaller tech company delivering triple digit revenue growth. And Apple faces challenges in China, the company’s second-biggest market after the U.S., from competition to geopolitical tension. In China, local providers such as Huawei are eating into its iPhone market share, as seen in recent sales figures. In the last quarter of the year, iPhone sales in China fell more than 18%, Bloomberg reported, citing Counterpoint Research.
A millionaire maker or not?
Still, I think Apple’s moat as well as the new growth drivers mentioned above -- and let’s not forget the company’s financial strength, with $108 billion in free cash flow -- should help this tech powerhouse continue to excel over time. This makes the stock a buy, but it doesn’t necessarily make it a millionaire-maker, at least not on its own.
My example above showed you had to make a pretty big investment in Apple 15 years ago -- when the company was earlier in its growth story -- to make millions. Today, you probably would have to invest even more, and it’s risky and unnecessary to put all of your eggs in one stock market basket. Instead, you’ll increase your chances of success by diversifying across a group of quality stocks -- and be sure to include Apple, as it could help you reach that cool million over time.
