Apple’s recent stock performance has taken a significant hit, shedding around 20% of its market value in just under a week.
But according to Bank of America, this might be an ideal time for long-term investors to take a closer look.
Analyst Wamsi Mohan suggests that Apple’s valuation has dropped to a level that, historically, tends to precede strong stock recoveries. With its forward price-to-earnings (P/E) ratio now sitting near 21, Mohan views the tech giant as offering a more appealing risk-reward balance than it has in some time.
Apple has fallen over 25% since the beginning of the year and roughly 23% since its last earnings report, well below the performance of the broader S&P 500 during the same periods. Trade disputes between the U.S. and China and slower-than-expected progress on AI enhancements for Siri have further pressured the stock.
Despite these headwinds, historical patterns suggest Apple tends to rebound strongly after its P/E ratio slips below 25. Previous instances have often led to notable gains over the following 3, 6, 9, and 12 months. For instance, Apple delivered returns of 36% in the year following a similar valuation dip in March 2024 and 34% after a similar scenario in late 2023.
Though there have been rare exceptions—such as a 12% drop following the April 2022 dip—downside risks have generally been limited in comparison to the upside potential.
Still, some investors may worry this time could be different due to mounting geopolitical tensions, particularly regarding Apple’s dependence on China for manufacturing. Yet Bank of America believes Apple is well-positioned to adapt. The company could shift more production to other countries like India, increase prices across its products and services, streamline supplier costs, roll out more premium products, or adjust its product launch schedules.
These strategies could help Apple navigate near-term challenges while setting the stage for a longer-term recovery.
Kosta Gushterov
Reporter at Coindoo
Kosta has been a part of the team since 2021 and has solidified his position with a thirst for knowledge, incredible dedication to his work and a “detective-like” mindset. He not only covers a wide range of trending topics, he also creates reviews, PR articles and educational content. His work has also been referenced by other news outlets.
Source: https://coindoo.com/market-sell-off-sets-stage-for-apples-rebound-data-shows/