As 2023 approaches, Apple's stock price is rising, but it pales in comparison to its peers in other large technology stocks. This is mainly because Apple's revenue has declined for four consecutive quarters, which is also the company's longest decline since the dot-com bubble burst in 2001.
Some of Apple's troubles this year are due to a tough economic environment for phones and computers. This summer, total smartphone sales hit their lowest level in more than a decade.
However, Apple faces some problems of its own. Apple did not release a new iPad this year, marking the first time it has not released a new iPad model in a calendar year since the product launched in 2010. Without new models, Apple will not cut prices on older products to boost sales.
Morgan Stanley analysts said that earlier this month, all iPad models sold on Apple's official website were shipped on the same day. This is a sign of weak demand, as Apple doesn't have enough supply to ship its most popular products on such a short notice.
In the 2023 fiscal year ending at the end of September this year, Apple’s iPad revenue was US$28.3 billion, a year-on-year decrease of 3.4%. According to Wamsi Mohan, an analyst at Bank of America, iPad sales are even worse in terms of shipments, with a year-on-year decline of 15%.
To make matters worse, the new Apple Watch was forced to be removed from Apple stores in the United States just days before Christmas due to an intellectual property dispute. After an appeal was filed in late December, the devices were returned to shelves, but Morgan Stanley analysts estimated that Apple lost about $135 million in sales per day during the brief ban.
Even for Apple's new products, such as Mac computers, consumers are less willing to spend money to buy these products that are not significantly upgraded. In fiscal year 2023, MacPC and notebook computer sales were US$10.2 billion, a year-on-year decline of nearly 27%. According to Bank of America estimates, Mac computer shipments fell 11% year-on-year.
As of Thursday's close, Apple shares were still up 49% this year, ahead of the Nasdaq's 44% gain. But in comparison, Nvidia stock has more than tripled this year, Meta has soared nearly 200%, Tesla has more than doubled, Amazon is up 83%, Alphabet has climbed 59%, and Microsoft has also climbed 57%.
To resume revenue growth and support its $3 trillion market value, Apple needs some new products to help it, as well as a rapid rebound in global demand for smartphones and laptops. A major test will come early next year, when Apple's first mixed reality (MR) headset Vision Pro will be launched, priced at $3,499.
Morgan Stanley analyst Erik Woodring said earlier this month: "We believe that the success of VisionPro is not yet in 2024, and its potential is long-term."
UBS analyst David Vogt expects revenue next year to be about $1.4 billion, assuming VisionPro shipments of 400,000 units. For Apple, this is obviously not a big number.
But consumer enthusiasm will be key. Vision Pro is Apple's first new device since the release of Apple Watch, and it may bring traffic to Apple's existing products. And, if it's popular enough, it could prove Apple's leadership in the future of computing.