Despite the coronavirus crisis and the weak demand for iPhones as well as wearable products, Apple Inc. (NASDAQ:AAPL) managed to deliver strong numbers in its latest reported quarter. Over the course of the past decade, Apple has been one of the best stocks in terms of returns, but there are significant challenges in the near term for the company.
The company is expected to continue to grow in the long term, but it is important to figure out if it is going to be worthwhile for investors to enter the stock at this point.
One of the most important things to keep in mind is that Apple’s success depends a lot on iPhone sales, and the outlook at this point is weak. The company stated that the sales could be weak in the period until June. Some investors might point to the company’s growing services business, but at this point, it makes up only 23% of its revenues while iPhone sales make up 50%.
Even if the company does manage to release its new model this fall, the demand could be weak since as many as 20 million Americans were rendered unemployed in June. On the other hand, some might wait until the company releases its new 5G iPhone.
While the near term situation might not be rosy, it should be noted that Apple boasts of a massive cash pile, which the company is going to invest in new products and drive long term growth. The company has announced that it is going to invest $350 billion in the United States over the next half a decade. The launch of 5G is also expected to drive demand for the company’s products, namely the iPhone and the IPad.
On the other hand, Apple is also looking to make strategic acquisitions in order to position the company for explosive growth in the next decade. While the situation in the near term remains a bit unstable, it could well prove to be a highly prudent long term investment.