As Apple stock has already surged over 40% this year, investors eagerly await its future performance in 2023. While I remain long on this stock, I have to admit that this valuation (driven mainly by multiple expansion) may come with increased risks.
Let’s dive into reasons to remain optimistic, and cautious, with Apple stock right now, and explore whether this stock has what it takes to end the year above the $200 per share level (assuming no splits).
AAPL Hits $3 Trillion Milestone
Investors who want to exercise caution can hold their Apple positions without aggressively adding more. Achieving a $3 trillion market capitalization is impressive, but Apple faces challenges in maintaining rapid growth.
Sensible investors should carefully monitor Apple’s future moves. It’s crucial to remember that no stock continuously rises in a straight line, and prudent position sizing is vital for long-term success.
In 2023, Apple has risen 46%, while Nvidia (NASDAQ:NVDA) has surged 185%, becoming the first trillion-dollar chipmaker. Tesla (NASDAQ:TSLA) and Meta Platforms (NASDAQ:META) have doubled, and Microsoft added 40%.
Apple’s push above the $3 trillion milestone comes after launching an expensive augmented-reality headset, and continued excitement about potential margin expansion due to the proliferation of AI technology across the tech sector.
Why You Should Have AAPL in Your Portfolio
If you own or plan to invest in AAPL stock, consider its long-term potential for substantial gains. While short-term growth may continue modestly, or even potentially decline over the near-term, Apple’s stability and cash flow strength should not be ignored.
Morgan Stanley analyst Erik Woodring highlighted several growth catalysts for AAPL, including a potential hardware subscription service and expansion into emerging markets like India. Apple’s AR/VR device business holds the potential for significant revenue growth.
With sell-side earnings forecasts, Apple might achieve this valuation within two years. Over a 5- to 10-year period, continued double-digit earnings growth could add trillions more to the stock’s valuation.
For long-term growth investors, entering or adding to a position in AAPL stock is a favorable consideration.
AAPL bulls are gaining momentum, aiming currently for $170 resistance, a crucial level in the stock’s range. The ongoing struggle between bears and bulls could lead to a significant breakthrough, potentially pushing the price above $200 by year-end.
Is AAPL Stock Going to $200?
While Apple’s achievement of a $3 trillion market cap is noteworthy, it doesn’t significantly affect the long-term bullish outlook for the stock.
The above catalysts suggest that the stock has the potential for sustained growth. Thus, a $200 per share valuation (roughly $3.1 trillion valuation) is certainly within the realm of possibility by the end of the year.
Based on analyst projections, Apple’s share price should reach $220 by the end of 2023, $250 in 2024, and $315 in 2025.
Thus, there’s widespread belief that such a number isn’t only possible, but likely. That’s assuming that current market conditions hold, and some sort of shock doesn’t send the market lower as it did in 2022.
We’ll see. For now, I remain cautiously optimistic for holding Apple as a core position in the portfolio. As far as defensive tech is concerned, Apple is one of the best picks.
On the date of publication, Chris MacDonald has a LONG position in AAPL. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.