4. Apple Inc. (NASDAQ:AAPL)
10-Year Revenue CAGR: 8.03%
Number of Hedge Fund Holders: 184
Apple Inc. (NASDAQ:AAPL) is a multinational technology company that designs, develops, manufactures, and sells consumer electronics, software, and online services. The most well-known products include the iPhone, iPad, Mac, Apple Watch, and AirPods. It also provides software, such as iOS, macOS, watchOS, and tvOS, as well as online services like the App Store, iTunes, Apple Music, and iCloud.
It operates on a geographic basis, with segments focused on the Americas, Europe, Greater China, Japan, and the Rest of Asia Pacific. It recently moved away from its traditional annual product upgrade cycle to allow for more frequent releases and fewer delays. But the growing range of products has made this approach impractical. So now the company is adopting a staggered release strategy, as demonstrated by the upcoming launch of Apple Intelligence on October 28 with iOS 18.1.
FQ3 2024 revenue increased by 4.87% year-over-year, driven by strong growth in services, which reached a record $24.2 billion, up 14% from a year-ago period. While iPhone revenue declined slightly to $39.3 billion, Mac and iPad sales grew by 2% and 24%, respectively. However, Huawei recently surpassed it as the leading smartphone brand in China.
The company has experienced a long-term decline in mobile carrier upgrade rates, particularly for postpaid plans. This indicates that consumers are keeping their devices for longer periods, possibly due to economic factors, satisfaction with current technology, or the lack of compelling new features in recent models.
However, Apple Intelligence could boost demand in the US market. Analysts are bullish on Apple Intelligence’s potential to drive a longer upgrade cycle. Overall, Apple Inc.’s (NASDAQ:AAPL) strong brand, innovative products, and expanding ecosystem position it well for continued growth.
Vltava Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q3 2024 investor letter:
“You probably have not missed the news that Warren Buffett has already sold half the stock from his largest public markets investment, Apple Inc. (NASDAQ:AAPL). It was a phenomenal investment for Berkshire. Over the course of seven years or so, it brought a profit of well over USD 100 billion. Apple comprised a very large position within Berkshire’s public portfolio, and this was the reason we avoided Apple stock outright during that time. We considered our exposure to Apple through our holdings of Berkshire stock to be sufficient, and we ended up making a lot of money on it. There has been a great deal of speculation in the market about what Buffett’s sale of Apple signals regarding his view of the stock market. I think the reason for the sale is much simpler. Buffett probably considers Apple stock so expensive that he prefers to cash in at 20% less (after all, Berkshire must pay tax on its profits). He started selling in the first quarter of the year. When I was in Omaha for the general meeting in May, Buffett said he was still selling, and I expect he continued to do so in the third quarter. I have to say that, as a Berkshire shareholder, I am happy about the Apple sale. I think Berkshire’s management will find a better use for this money, as they always have in the past. It is quite likely that they already have a very specific idea about this. If that takes two or three years, it does not matter at all. This is not a race and, in the meantime, the risk of holding Berkshire Hathaway stock itself has been greatly reduced.”
