Apple Stock Forecast: Follow The Smart Money And Buy Apple

namanNaman Shukla is an Analyst at I Know First. He writes and invests in the stock market. Ranked in the top 8 percentile in Featured on,, among others.


Apple Stock Forecast

May 25th, 2016


  • appleMany institutional investors have been buying Apple.
  • Apple’s brand value is a long-term tailwind.
  • Despite current woes, Apple has growth opportunities in countries like India.
  • I Know First is currently bullish on AAPL stock


Following Apple’s (AAPL) weak quarterly results, the stock has pulled back roughly 15%. Falling iPhone revenue and weak guidance contributed to Apple’s plunge. While the bears think that Apple’s best days are behind it, many smart institutional investors and hedge funds are using Apple’s pullback to add to their long positions.

For instance, Berkshire Hathaway recently disclosed a $1 billion stake in Apple. In addition, investors like David Einhorn, Michael Burry, Leon Cooperman and Ken Fisher also have a big bet on Apple. The chances of so many smart investors being wrong are pretty less and there has to be a reason why these investment gurus are buying Apple.

While Apple’s short-term future may look bleak, these investors are focusing on the company’s long-term prospects. For investors who have a long-term investing horizon, Apple’s recent pullback is a great opportunity.

Robust competitive benefits

Warren Buffett’s strategy is to invest in firms with huge and bearable competitive advantages. According to Buffett, the key to investing is not retrieving how much an industry will grow or influence society, but relatively determining the competitive advantage of any particular company, and most significant, the robustness of that advantage.

Brand Value is the most dominant of competitive advantages, and Apple holds the leading position in the respective industry when it comes to the brand disparity. As per information from Interbrand, Apple is the most appreciated brand in the world, with a projected brand value of roughly $128 billion. This massive brand value throws light on greater pricing power as well as above-average profit margins for stockholders in Apple.

The company’s unified network of services and applications is also remarkably adhesive, signifying that customers are mainly loyal to Apple. Loyalty rates amid iPhone consumers in the United States sit in the area of 95 percent as per the recent survey by Kantar.

The most important reason why Buffett is usually unwilling to invest in tech firms is because the industry’s condition keeps varying. In simple words, today’s front-runner can simply turn out to be tomorrow’s loser. That being said, keeping in mind the company’s competitive advantages, Apple does not appear like a brittle company in any way and it isn’t surprising that Berkshire Hathaway has increased its position in the stock.

Strong Users demand

While it is very clear that Buffett avoids investing in complex tech stocks, he has a great history of investing in consumer stocks. And it highly likely that Apple’s consumer-knowing nature accounts for the reason behind Buffett’s recent $1 billion stake.

The company holds a robust position among the most prosperous consumer-oriented firms in the world. Apart from this, the company’s track record not only shows that it can manufacture appealing devices, but it also displays that it identifies a thing or two about producing an ecosystem of services and products for the devices.

As per the report from Apple, there are more than 1 billion active Apple devices around the globe, and in the most recent quarter, people used those devices to buy 20 percent more high-margin content from the company’s app and music store as compared to the same situation previous year. The company’s services business is on speed to produce $25 billion in sales in full-year 2016.

If the company’s customer’s demand for mobile content like music and movies endures, then it is an attractive bet that Apple will stay a cash cow. Despite the fact what has been pronounced as a poor quarter, the company still conveyed $10.5 billion in net income and repaid $10 billion to investors through stock repurchases and dividends. And this accounts for a good formula for an appealing investment.

India, a good opportunity

FactorDaily recently declared that the company will shortly publicize a local start-up accelerator in India, so as to encourage developers that wish to design and create iOS applications and services.

If Apple desired to convey something to the negotiating table to get the sourcing necessity relinquished, it appears promising that this start-up accelerator could have been a beneficial bargaining chip. Plausibly, Apple was able to influence supervisors with this investment, with the expectations that encouraging the local development community could possibly convert into a profitable windfall for the region.

On the other hand, the company repeatedly points to the App Store as a prevailing engine of job creation, perceiving that it has 380,000 paid members of its development program through ascribing 627,000 jobs generated to the wider iOS ecosystem.

Furthermore, a start-up in India would also help the company by producing localized content, which is a perilous tactical piece of its victory in any particular market. Having a robust collection of applications and services that are supplied to local languages and culture goes a protracted way with marketing iPhones.

apple stock forecast

(Source: IDC)

Apple’s CEO Tim Cook sees India as a similar growth opportunity as China was five to seven years ago. As you can see from the image above, smartphone shipments in India are expected to increase considerably over the next four years and Apple is taking the right steps to unlock the market and gain traction.



Despite Apple’s short-term woes, I think the stock is a long-term winner. Smart money is pouring into Apple after the recent selloff and the chances of so many reputed investors being wrong are very slim. Apple’s brand value, $220+ billion cash reserve, and growth opportunities in India make the stock an ideal pick for long-term investors.

My bullish stance on Apple is resonated by I Know First’s algorithmic signals. I Know First uses an advanced state of the art algorithm based on artificial intelligence and machine learning to foresee market performance for more than 3,000 markets including stock forecasts, world indices, commodities, interest rates, ETFs, and currencies.   The algorithm generates a forecast with a signal and a predictability indicator. The signal is the number at the center of the box. The predictability is the figure at the bottom of the box. At the top, a particular asset is identified. This format is standardized across all forecasts. The middle number indicates strength and direction, not a price target or percentage gain/loss. The bottom figure, the predictability, signifies a confidence level.

apple stock forecast

As seen from the above image, I Know First’s 1-year forecast is extremely bullish on Apple. The 169.67 indicates that the algorithm is bullish on Apple in the long run, which coincides with my outlook as well.


In addition, previously I Know First Algorithm correctly predicted AAPL stock movement. In this stock forecast, we can observe how Apple had a bearish signal of -0.57 and a predictability of 0.2 on Nov 15th,2015 and in just 3 months the stock managed to go down to 15.88% as the algorithm correctly predicted.

Apple Stock Forecast