Apple stock price has sold off this year, making it the top laggard in the Magnificent 7 group. It remains in a deep bear market after falling by over 20% from the highest level this year, and has also formed a death cross pattern as the 50-day and 200-day Exponential Moving Averages (EMA) crossed each other.
Will AI glasses save Apple stock?
Apple stock price has crashed in the past few months as concerns about its business continue. The company’s flagship product, the iPhone, has largely peaked, with its annual sales falling.
Apple has also lost the artificial intelligence (AI) race and has even been sued for false promotion. The lawsuit alleges that the company’s presentation, when showcasing the features, misled consumers.
Apple has responded by replacing its top leaders and committing to more innovation to boost its business.
One of these innovations is that the company hopes to launch smart glasses at the end of the year, mirroring Google’s strategy in its partnership with Warby Parker. It is also aiming to emulate Meta Platform’s partnership with Ray-Ban.
Apple also hopes to incorporate AI search on its platform, a move that may see it ditch Google as the main search provider. Such a move would save it over $25 billion that it pays Google annually.
The fact that Apple has failed to create usable AI products has baffled investors who cite its balance sheet and talent. In contrast, Elon Musk’s xAI built Grok, a platform that has become the biggest threat to ChatGPT.
Launching AI glasses will likely be a niche product as its Vision Pro did. Launched with pomp and color in 2023, the glasses have not become popular.
Apple’s slow growth
The most recent financial results showed that the company is not growing as it did in the past. Its revenue rose to $95.3 billion in the first quarter, up by $5 billion from the same period last year.
This growth was spread across the product and services segments. Product sales rose to $68 billion, while the services made $26 billion.
The services segment is made up of top services like Apple Pay, Apple Music, Apple TV+, Apple Arcade, and Apple Fitness.
Apple has long hoped that the services segment will become a major part of its business. While it has achieved that so far, the segment lacks any clear catalysts to propel its future growth.
This slow growth has led to concerns about Apple’s valuation since it is now the second-biggest company in the world with a market cap of over $3 trillion.
Apple trades at a premium, helped by its strong brand, balance sheet, and the ongoing share repurchases program. It has reduced its outstanding shares from 17.13 billion in 2020 to 14.93 billion today, a move that has helped to push its earnings per share from $3.3 to $6.
Apple has a forward P/E multiple of 28, higher than the sector median of 27. Its forward EV to EBITDA is 21, also higher than the technology sector median of 14.
Apple stock price technical analysis
AAPL stock chart by TradingView
The daily chart shows that the AAPL stock price has crashed from the year-to-date high of $260 to $200 today. It formed a death cross pattern on April 8 as the 50-day and 200-day moving averages crossed each other.
Its attempts to rebound from the April low of $170 have faced substantial resistance at $214, where it formed a double-top pattern.
Therefore, the stock will likely continue falling as sellers target the year-to-date low of $170, which is about 16% below the current level. The bearish outlook will become invalid if the stock rises above $215.
Read more: Cramer is worried about Apple: here’s why
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