Is it Time to Sell Apple?
I have gone on a full 180 of Apple. For the longest time, I have been the most intense defender of Apple. I have owned the stock for years, and it has made me some money. Apple has been a profitable bet, but I am getting a weird gut feeling about the company. I may give it a few more quarters, or maybe not (I am a bit spontaneous) before I pull the plug, but I do not see a high ceiling for growth, and that is irking me.
Apple’s cash flow has been flat for the past three years while its stock has continued to increase. I am not a value investor, but some weight must be put towards the signals, and these signals are not positive. When valuations are increasing, it is because investors think revenue will be higher than what the broader market is predicting, but I do not understand where this optimism is coming from, and Warren Buffett (the value GOAT) agrees, reducing his Apple holding by 13% in this first quarter and 50% in the second. THAT IS SUPER WORRYING.
If we look at future growth, the future is not bright. The only reason iPhone sales would increase dramatically is if Apple Intelligence is a surprisingly massive hit. I am, frankly, not expecting much. I love AI, and I think AI is the future, but AI is not turning any company around right now, nor is it heaping on value to a strong company. AI is a nice to have, and very crucial for the future, but right now, it will not make consumers drop $1000+ to get the new phone. The Apple Vision Pro, which I hyped up quite a bit, had a seriously awful launch, and while I still believe it will be something in the future, I no longer think it will be iPhone-esque. The Vision Pro has no third-party apps or games, and interest from companies like YouTube and Netflix was minimal. Realistically, the best-case scenario is that the Vision Pro is a more profitable Apple Watch, that is not worth staying around. The iPad is a joke that only old people use, and they only use it because it’s just a much bigger iPhone. The Mac is a great product (Mac user), but I do not see much expansion there in the future either.
I am a growth investor, and Apple is not a company that will double in price five years from now in as many worlds as some alternatives.
As I have needed capital for other investments, my Apple stake has been trimmed again and again, so the company now makes up 7% of my portfolio. Apple is 1/3 of Costco’s weight, ½ of Block’s weight, ½ of Ferrari’s weight, ½ of Microsoft’s weight, and 2/3 the weight of TQQQ. My portfolio is soooooo concentrated, and Apple only makes up 7% of it, which means that it has relatively little impact on my money.
One of two things need to happen. First, someone needs to reassure me right now (preferably a high-ranking Apple official), or I will find somewhere else to put my cheddar. I do not think Apple will do poorly over the next five years, but I do think it will struggle to outperform the broader market, and in particular, the high-growth tech stocks I am looking for.
Staying with my tech theme, there are three stocks I am keeping my watchful eye on. Salesforce, Intuit, and CrowdStrike.
Besides, due to TQQQ, Apple is already 1% of my portfolio.
Please do not kill me, Tim Cook.
