Will 2024 be a bad year for Apple stock?

apple (AAPL -0.23%) The company has gotten off to a tough start heading into 2024. Stocks fell in the first week of the new year as investors cashed in after a strong 2023 that saw stocks rise 48%. Analysts have also expressed concerns about the company’s growth rate, a legitimate concern given the possibility of the economy slipping into recession this year.

Is 2024 destined to be a bad year for Apple, so is now the time to sell your stock?

Analysts are downgrading the stock

Multiple securities companies have lowered their price targets for Apple stock this year. The consensus price target among analysts is just under $200, suggesting an upside of about 8% from today’s price, according to Wall Street. In other words, Apple’s stock price may be nearing its peak.

There are multiple reasons why analysts are bearish on the stock, all of which inevitably lead to concerns about slower growth. Weak demand in China, patent disputes over the Apple Watch, and high stock valuations are just some of the reasons why the stock may not be as exciting right now. Additionally, a possible recession this year could weigh on domestic demand for the company’s products.

Apple’s growth rate is already slowing

Slowing growth is nothing new for Apple. It’s been an issue for the last few years. Apple sees its business growth slowing as interest rates rise and consumer budgets tighten.

AAPL Revenue (Quarterly YoY Growth) Data by YCharts

There’s no denying that the company has a loyal following and a strong customer base, but that alone isn’t enough to prevent the growth rate from declining. And there are no major catalysts to prevent further deterioration in growth rates. This is a problem because this stock is not cheap at 30x P/E.

Focusing on AI and headsets could hurt profits

What could be more problematic for investors is Apple’s focus on next-generation technologies such as artificial intelligence (AI) and its expensive Vision Pro headset.

The $3,499 mixed reality headset is Apple’s first 3D camera as it looks to open up new opportunities in gaming and entertainment. As Apple seeks to become a bigger player in his AI field, there are rumors that it is also working on a chatbot, which some are calling “Apple GPT.”

The challenge here is that more companies are developing chatbots, which could be an expensive undertaking for Apple.And investors already know about technology companies meta platform Despite investing billions of dollars in the Metaverse and virtual reality headsets, these efforts have yielded little results and are draining the company of revenue and cash.

While the hope is that investments in AI and next-generation headsets will pay off in the long run, the risk is that investing too much in these businesses as they compete for market share could hurt Apple’s bottom line. That means things could get worse, and already high stock prices could fall even further. Earnings multiples get even higher in the process. That hasn’t happened so far, but investors should take note, especially if Apple’s growth continues to decline over the next few quarters and the company feels pressure to turn things around. .

Should you buy Apple stock if it struggles this year?

This year could be a tough year for Apple. The company needs to improve its growth rate, or the tech stock could plummet. But investors should resist the urge to sell.

The good news is that with a strong brand, devoted customer base, and solid financials, this stock could still be a good long-term investment. Buying Apple stock because of its weakness this year could be an attractive option for investors.

2024 may be a bad year for Apple, but the business itself remains strong. I wouldn’t worry too much about Apple’s stock price in the long run.