Apple Inc. (NASDAQ:AAPL) finds itself in a challenging position, with one Wall Street analyst expressing pessimism about the company’s stock performance. Late to the artificial intelligence (AI) arena, Apple recently sought assistance from Google for its AI endeavors. Disheartening data reveals a 37% year-to-date decline in iPhone shipments in China, further exacerbating Apple’s woes. Since late January, the stock has plummeted by over $20 in value, signaling troubling times ahead.
Maxim Group analyst Tom Forte predicts a bleak outlook for Apple stock, labeling it as “dead money” for the foreseeable future. Although not recommending a sell, Forte anticipates minimal upward movement in the stock price, setting a modest $178 price target over the next year, and maintains a “hold” rating on Apple.
The grim forecast is attributed to Apple’s heavy reliance on the Chinese market, which contributes 18.9% of its revenue. With iPhone sales faltering in China due to government pressure, Apple faces a significant setback, given that the iPhone constitutes the bulk of its operating profit. While the company has achieved some success in boosting services revenue, declining hardware sales coupled with heightened regulatory scrutiny worldwide pose challenges to Apple’s growth trajectory. This impediment may hinder both sales and stock price appreciation in the short and long term.
Analysts project Apple’s profits to grow at a modest rate of approximately 10% annually over the next five years. While this growth rate is respectable, Apple’s current price-to-earnings (P/E) ratio of over 26 suggests that it may not be sufficient to justify the stock price. Considering Apple’s status as a high-quality, high-profit-margin company, a price/earnings to growth (PEG) ratio of 2.5 appears excessive without a revival in iPhone sales.
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Author Faith Yakubu 
