Analysts Predict Apple's Stock Performance and Potential Competitors in the Coming Years

Prediction: 3 Stocks That Will Be Worth More Than Apple 3 Years From Now

Apple (NASDAQ: AAPL) recently became the world's most valuable company again with a market cap of $3.57 billion. Its stock rallied more than 60% over the past three years, even as iPhone sales cooled off amid tougher macro and competitive headwinds. From fiscal 2023 (ended last September) to fiscal 2026, analysts expect Apple's revenue to grow at a compound annual growth rate (CAGR) of 5% as its earnings per share (EPS) rises at a CAGR of 10%. That growth will likely be driven by a cyclical recovery in iPhone sales, an expansion into higher-growth markets like India, and the evolution of Apple's subscription ecosystem that hosts over a billion subscribers. Apple will also likely repurchase tens of billions of dollars in shares every year to boost its EPS. Image source: Apple. Those growth rates make Apple a stable long-term investment, but they're a bit weak for a stock that trades at 35 times forward earnings and 9 times this year's sales. Therefore, Apple's valuations might have been inflated by the recent hype regarding its generative AI plans for its first-party apps. Assuming Apple meets Wall Street's estimates and still trades at the same price-to-sales ratio by fiscal 2026, its market cap could grow about 12% to $4.01 billion by the final year. Apple, Nvidia, Microsoft, and Alphabet operate different business models. Apple generates more than half of its revenue from the iPhone, but it relies on its services business to drive most of its growth. Nvidia generates most of its revenue by selling high-end data centers for processing AI tasks. Microsoft generates over half of its revenue from its cloud businesses, which include its Azure cloud infrastructure platform, Office 365 productivity services, and Dynamics customer relationship management (CRM) services. Alphabet generates most of its revenue from Google's advertising business, which includes its search and display ads, its advertising network, and YouTube. However, its smaller Google Cloud business is growing at a much faster clip than its core advertising business. All four companies have been expanding their generative AI ecosystems. Apple recently integrated OpenAI's ChatGPT into its own apps and announced new generative AI features for creating images and writing text. Microsoft, which is OpenAI's top investor, integrates the start-up's generative AI tools into its own cloud-based services. Alphabet has been upgrading its Gemini generative AI platform to keep up with OpenAI, and it's been rolling out those tools across its entire ecosystem. Nvidia profits from that secular trend by selling the best "picks and shovels" for the AI gold rush. All three tech giants are growing faster than Apple But out of these four companies, only Apple generates most of its sales from a slower-growth and cyclical consumer electronics business. Nvidia is a high-growth chipmaker, Microsoft is a cloud and AI play, and Alphabet is a digital advertising company. That's why analysts expect all three companies to grow faster than Apple over the next three years. Data source: MarketScreener. Assuming they match those estimates and their price-to-sales ratios hold steady, Nvidia could be worth $5.3 trillion by fiscal 2027 (which ends in January 2027), Microsoft would be worth $4.5 trillion by fiscal 2026 (which ends in June 2026), and Alphabet's market cap could reach $3 trillion. But with the same price-to-sales ratio as Microsoft, Alphabet's market cap could nearly reach $6 trillion. Therefore, all three tech giants have a shot at eclipsing Apple's market cap over the next three years. But look beyond the market caps It's interesting to track the market caps of the world's largest companies, but it's a superficial approach that glosses over their core strengths and weaknesses. All four of these "Magnificent Seven" stocks will likely keep growing. Apple is a rock-solid investment in the mobile computing market, Microsoft and Google are evolving into cloud and AI companies, and Nvidia is still arguably the best pure play on the AI accelerator chip market. So instead of wondering which tech giant will be the most valuable in three years, investors should simply focus on their ability to expand their ecosystems, widen their moats, and generate consistent growth. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $791,929!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Leo Sun has positions in Apple. The Motley Fool has positions in and recommends Alphabet, Apple, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Where Will Apple Stock Be in 5 Years?

As of this writing, Apple (NASDAQ: AAPL) is the world's most valuable enterprise, with a massive market cap of $3.5 trillion. It has become a global technology and cultural icon. That huge valuation is thanks to impressive returns. Since July 2019, shares have soared 357% (as of July 9, 2024), easily outpacing the 137% total return of the Nasdaq Composite Index. This top "Magnificent Seven" stock has clearly been a huge winner in the past. But where will Apple be in five years? Hardware rules Apple is well-known for selling popular hardware products. In fact, these still drive the company's financial performance. In fiscal 2023, 78% of Apple's revenue came from devices, with the vast majority resulting from the iPhone. The company's other product include MacBooks, iPads, AirPods, and the Apple Watch. Most investors would agree that Apple will still be generating most of its sales from hardware products five years from now, particularly from the iPhone. Even though this device is 17 years old, with the first launch occurring in June 2007, the business continues to introduce newer models. The problem, though, is that people likely don't feel the need to upgrade as often as they did before, as innovations become less and less game-changing. Revenue totaled $383.3 billion last fiscal year, which was down 2.8% compared to fiscal 2022. Apple is already such a massive company that it's becoming increasingly difficult to drive meaningful growth. Unless a revolutionary new product is introduced, I don't see this changing. Creating the ecosystem Besides hardware, Apple also sells software and services, which registered $85.2 billion of revenue in fiscal 2023, or 22% of the total. Offerings include cloud services, digital ads, Apple Pay, Apple Card, Apple Music, Apple TV+, and the App Store. The advantage this segment has is that in second-quarter 2024 (ended March 30), it carried an outstanding gross margin of 75%, significantly above the hardware division's gross margin of 37%. Even better, services have typically reported faster top-line growth as well. It's one thing to sell hardware products, which on their own might not result in a special business. But what makes Apple unique is that it successfully combines hardware and software, and this creates an ecosystem that essentially locks users in. This helps explain Apple's strong brand and customer loyalty. In order to bolster this already powerful ecosystem, Apple is aiming to make a bigger splash in artificial intelligence (AI). Management announced features like enhanced writing tools, an improved Siri, and ChatGPT integration, among others, that will come equipped in the newest iPhone model, set to be released later this year. The hope is the addition of AI will drive greater iPhone sales, as people find that having access to these features is essential to their daily lives. Time will tell if this all works out, though. Is it too late to buy Apple stock? Apple shares have done remarkably well historically. And just in the past month or so, after the company's AI strategy was revealed, shares soared 18%, as the market seems bullish on Apple's prospects. The stock currently sits in record territory. In my opinion, it might now be too late to add Apple to your portfolio. The price-to-earnings ratio of 35.5 represents a huge premium to the trailing five- and 10-year averages. You would think Apple was about to experience an above-normal growth spurt in the years ahead to justify this valuation. But this just doesn't seem likely. According to Wall Street consensus analyst estimates, the business is expected to increase revenue and earnings per share at compound annual rates of 5% and 10%, respectively, between fiscal 2023 and fiscal 2026. I'd expect these trends to continue even further out than that, which makes me think that Apple shares will underperform the broader Nasdaq Composite Index over the next five years. The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Apple wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $791,929!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Prediction: 3 Stocks That Will Be Worth More Than Apple 3 Years From Now | The Motley Fool

Apple is the world's most valuable company again -- but can it keep its crown? Apple (AAPL 1.30%) recently became the world's most valuable company again with a market cap of $3.57 billion. Its stock rallied more than 60% over the past three years, even as iPhone sales cooled off amid tougher macro and competitive headwinds. From fiscal 2023 (ended last September) to fiscal 2026, analysts expect Apple's revenue to grow at a compound annual growth rate (CAGR) of 5% as its earnings per share (EPS) rises at a CAGR of 10%. That growth will likely be driven by a cyclical recovery in iPhone sales, an expansion into higher-growth markets like India, and the evolution of Apple's subscription ecosystem that hosts over a billion subscribers. Apple will also likely repurchase tens of billions of dollars in shares every year to boost its EPS. Those growth rates make Apple a stable long-term investment, but they're a bit weak for a stock that trades at 35 times forward earnings and 9 times this year's sales. Therefore, Apple's valuations might have been inflated by the recent hype regarding its generative AI plans for its first-party apps. Assuming Apple meets Wall Street's estimates and still trades at the same price-to-sales ratio by fiscal 2026, its market cap could grow about 12% to $4.01 billion by the final year. That market cap would still make Apple one of the world's most valuable companies, but I believe three of its trillion-dollar peers -- Nvidia (NVDA 1.44%), Microsoft (MSFT -0.25%), and Alphabet (GOOG -0.28%) (GOOGL -0.27%) -- could eclipse its valuation over the next three years. Apple, Nvidia, Microsoft, and Alphabet operate different business models. Apple generates more than half of its revenue from the iPhone, but it relies on its services business to drive most of its growth. Nvidia generates most of its revenue by selling high-end data centers for processing AI tasks. Microsoft generates over half of its revenue from its cloud businesses, which include its Azure cloud infrastructure platform, Office 365 productivity services, and Dynamics customer relationship management (CRM) services. Alphabet generates most of its revenue from Google's advertising business, which includes its search and display ads, its advertising network, and YouTube. However, its smaller Google Cloud business is growing at a much faster clip than its core advertising business. All four companies have been expanding their generative AI ecosystems. Apple recently integrated OpenAI's ChatGPT into its own apps and announced new generative AI features for creating images and writing text. Microsoft, which is OpenAI's top investor, integrates the start-up's generative AI tools into its own cloud-based services. Alphabet has been upgrading its Gemini generative AI platform to keep up with OpenAI, and it's been rolling out those tools across its entire ecosystem. Nvidia profits from that secular trend by selling the best "picks and shovels" for the AI gold rush. But out of these four companies, only Apple generates most of its sales from a slower-growth and cyclical consumer electronics business. Nvidia is a high-growth chipmaker, Microsoft is a cloud and AI play, and Alphabet is a digital advertising company. That's why analysts expect all three companies to grow faster than Apple over the next three years. Data source: MarketScreener. Assuming they match those estimates and their price-to-sales ratios hold steady, Nvidia could be worth $5.3 trillion by fiscal 2027 (which ends in January 2027), Microsoft would be worth $4.5 trillion by fiscal 2026 (which ends in June 2026), and Alphabet's market cap could reach $3 trillion. But with the same price-to-sales ratio as Microsoft, Alphabet's market cap could nearly reach $6 trillion. Therefore, all three tech giants have a shot at eclipsing Apple's market cap over the next three years. It's interesting to track the market caps of the world's largest companies, but it's a superficial approach that glosses over their core strengths and weaknesses. All four of these "Magnificent Seven" stocks will likely keep growing. Apple is a rock-solid investment in the mobile computing market, Microsoft and Google are evolving into cloud and AI companies, and Nvidia is still arguably the best pure play on the AI accelerator chip market. So instead of wondering which tech giant will be the most valuable in three years, investors should simply focus on their ability to expand their ecosystems, widen their moats, and generate consistent growth.

Where Will Apple Stock Be in 5 Years? | The Motley Fool

That huge valuation is thanks to impressive returns. Since July 2019, shares have soared 357% (as of July 9, 2024), easily outpacing the 137% total return of the Nasdaq Composite Index. This top "Magnificent Seven" stock has clearly been a huge winner in the past. But where will Apple be in five years? Apple is well-known for selling popular hardware products. In fact, these still drive the company's financial performance. In fiscal 2023, 78% of Apple's revenue came from devices, with the vast majority resulting from the iPhone. The company's other product include MacBooks, iPads, AirPods, and the Apple Watch. Most investors would agree that Apple will still be generating most of its sales from hardware products five years from now, particularly from the iPhone. Even though this device is 17 years old, with the first launch occurring in June 2007, the business continues to introduce newer models. The problem, though, is that people likely don't feel the need to upgrade as often as they did before, as innovations become less and less game-changing. Revenue totaled $383.3 billion last fiscal year, which was down 2.8% compared to fiscal 2022. Apple is already such a massive company that it's becoming increasingly difficult to drive meaningful growth. Unless a revolutionary new product is introduced, I don't see this changing. Besides hardware, Apple also sells software and services, which registered $85.2 billion of revenue in fiscal 2023, or 22% of the total. Offerings include cloud services, digital ads, Apple Pay, Apple Card, Apple Music, Apple TV+, and the App Store. The advantage this segment has is that in second-quarter 2024 (ended March 30), it carried an outstanding gross margin of 75%, significantly above the hardware division's gross margin of 37%. Even better, services have typically reported faster top-line growth as well. It's one thing to sell hardware products, which on their own might not result in a special business. But what makes Apple unique is that it successfully combines hardware and software, and this creates an ecosystem that essentially locks users in. This helps explain Apple's strong brand and customer loyalty. In order to bolster this already powerful ecosystem, Apple is aiming to make a bigger splash in artificial intelligence (AI). Management announced features like enhanced writing tools, an improved Siri, and ChatGPT integration, among others, that will come equipped in the newest iPhone model, set to be released later this year. The hope is the addition of AI will drive greater iPhone sales, as people find that having access to these features is essential to their daily lives. Time will tell if this all works out, though. Apple shares have done remarkably well historically. And just in the past month or so, after the company's AI strategy was revealed, shares soared 18%, as the market seems bullish on Apple's prospects. The stock currently sits in record territory. In my opinion, it might now be too late to add Apple to your portfolio. The price-to-earnings ratio of 35.5 represents a huge premium to the trailing five- and 10-year averages. You would think Apple was about to experience an above-normal growth spurt in the years ahead to justify this valuation. But this just doesn't seem likely. According to Wall Street consensus analyst estimates, the business is expected to increase revenue and earnings per share at compound annual rates of 5% and 10%, respectively, between fiscal 2023 and fiscal 2026. I'd expect these trends to continue even further out than that, which makes me think that Apple shares will underperform the broader Nasdaq Composite Index over the next five years.