Apple stock analyst delivers blunt warning

Apple's long-standing dominance in consumer electronics has made it a beloved household name with a legion of ardent supporters. As a result, Apple's sales have soared to over $375 billion annually from below $100 billion in 2010.

Success like that doesn't grow on trees, so Apple's fandom extends beyond iPhone, Mac, and iPad users. It's also won the hearts and minds of investors who have turned it into one of the most widely owned stocks on the planet and the second-largest holding behind Microsoft in the S&P 500.

Apple's stock price benefited in 2023 from bargain-hunters seeking it out for its history of steady-eddy performance following 2022's bear market. However, it's been tougher going so far in 2024. Its shares have fallen 8% from its December peak, raising questions about what could happen to shares next.

Real Money Pro's Bruce Kamich, an analyst with over 50 years of experience navigating the stock market, recently updated his Apple stock analysis. His recommendation may frustrate some investors.

Apple's iPhone is its most important product

Apple's co-founder Steve Jobs was legendary for his ability to create beautifully designed and easy-to-use products, including the Macintosh computer in the 1980s, the Apple iPod in 2001, and the iPhone in 2007. 

Apple's most significant product, however, is undeniably the iPhone. The device ushered in the smartphone era, and in addition to racking up tens of billions in quarterly revenue from selling them, the company generates billions more from the apps users run on them.

Related: Apple gives employees a harsh ultimatum that puts their jobs at risk

The consumer electronics giant has sold over 2.3 billion iPhones worldwide since its launch 16 years ago, including almost 100 million in the first half of 2023. In the company's fiscal fourth quarter ending September, iPhone revenue totaled $44 billion, or 49%, of Apple's $90 billion in sales. Services revenue, which includes the App Store, produced revenue of $22 billion.

Unsurprisingly, Apple accounted for 53% of all smartphone shipments last quarter, according to Counterpoint. Its global market share isn't as big, but IDC estimates it owned 20% of the market last year, outpacing competitor Samsung, whose share is 19%, for the first time.

Apple demand hits a speedbump

Apple's market size could be a problem for the company because the market has matured, and competition for new smartphone users is tough. 

That's particularly true in China, where regulators have reportedly raised red flags about state workers and workers in sensitive industries owning iPhones rather than competing Chinese handsets, such as those made by Huawei and Xiaomi.

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The challenge of selling the new iPhone 15 lineup in China has already sparked concern among Wall Street analysts.

For example, Barclays' analyst Tim Long recently issued a rare underperform rating on Apple stock, analyst-speak for "sell." 

“We are still picking up weakness on iPhone volumes and mix, as well as a lack of bounceback in Macs, iPads, and wearables,” says Long. “The biggest takeaway from the latest checks is incrementally worse [iPhone] 15 data points out of China, together with developed markets remaining soft.”

Reports that Apple is cutting iPhone prices sold in China by $70 appear to reinforce worries about soft sales. However, iPhone sales promotions could be geared toward keeping competitors at bay during the important Chinese New Year sales quarter.

Apple's stock chart offers clues to what's next

As a technical analyst, Kamich uses price, volume, and momentum activity to gain insight into the aggregate sentiment of all investors, including big mutual and hedge fund managers with access to tools everyday investors can only imagine.

On Jan. 15, Kamich reviewed Apple's daily and weekly charts for clues to what could happen to Apple shares next. Unfortunately for the Apple bulls, Kamich was unimpressed.

"Apple's charts aren't a picture of strength," said Kamich. "Prices are trading below the 50-day line, and that could mean a break of the 200-day is more likely now. The On-Balance-Volume (OBV) line shows weakness from the middle of December, telling me that sellers of AAPL are more aggressive than buyers. The trend-following Moving Average Convergence Divergence (MACD) oscillator has crossed below the zero line for an outright sell signal."

On-balance volume – essentially a measure of up minus down day volume – should be rising to add conviction that Apple's next move is higher, not lower. Similarly, the MACD momentum indicator should be positive, not negative.

"The charts and indicators of Apple look weak. Avoid the long side of the stock," bluntly concluded Kamich.