Apple Will Be the Worst "Magnificent Seven" Stock to Own Between Now and 2030

If you have a 401(k) or an individual retirement account (IRA), you probably own some Apple (AAPL) stock either directly or through ownership of a mutual fund or exchange-traded fund (ETF). Therefore, just about everyone has a reason to be concerned about Apple’s performance, because its poor performance could cost you money.

So, let’s explore why Apple is poised to underperform its big tech peers and what investors can do to prepare themselves.

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The Apple logo in front of a hand holding an iPhone on a black background.
Image source: The Motley Fool.

First, we must cover the storm clouds on the horizon. In a nutshell, Apple is facing three key challenges:

  • An aging signature product

  • Increasing competition

  • Global regulatory, supply, and trade headwinds

Let’s start with its aging signature product: the iPhone. Next year will mark the 20th anniversary of the iPhone. When it was launched, the iPhone was revolutionary. But 20 years on, each successive iPhone is less compelling than the last. Simply put, the iPhone market is saturated. The company now increasingly relies on price hikes for growth. And since iPhones still account for about 50% of Apple’s revenue, that matters.

Then there’s the competition. While Apple is still king of the U.S. market, with approximately 60% market share, China is another story. There, Apple holds about 25% market share, with competitors like Huawei, Vivo, and Xiaomi splitting much of the remaining market. If Apple’s market share in China were to deteriorate, it could spell trouble for Apple stock.

Last, there are the regulatory and trade risks. Apple’s biggest bright spot is its high-margin services segment, which includes its App Store. However, global regulators have zeroed in on the App Store, threatening to derail Apple’s best catalyst. European regulators have forced Apple to allow alternative app stores to operate on its devices; the U.S. Department of Justice is suing Apple on antitrust grounds.

What’s more, there are the overarching threats to Apple’s supply chain and the perils caused by tariffs. Apple, with massive offshore manufacturing facilities and suppliers, could become a casualty if the simmering trade war with China were to boil over.

None of this means Apple’s stock is going to fall off a cliff. However, investors may need to recalibrate their expectations. Gone are the days when Apple was a leading growth stock. It’s now transitioning to a value stock, although it is still priced like a growth stock.

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