In its look at tech trends for the new year, Loup Ventures says it expects Apple will be the top-performing FAANG stock in 2021 based on four key factors.
First, the analysts agree that tech dependency has increased because of the pandemic, and they see this change as sustainable moving forward.
“Apple is the cornerstone of this digital transformation with a combination of hardware, software, and services that its competitors cannot match in terms of reach or popularity,” reads the analysis.
Next, the analysts predict that the fiscal year on Wall Street will grow past consensus estimates of 5 percent on the year.
“While Street FY21 revenue growth estimates of about 15% are in line with our expectations, we believe consensus estimates for FY22 of 5% y/y revenue growth are too low and expect those estimates will inch higher throughout FY21. Ultimately, we believe FY22 revenue growth will be closer to 10%. We believe the drivers of this revenue upside will be a combination of iPad, Mac, and iPhone growth.”
Additionally, 5G will cause the biggest smartphone upgrade cycle since the iPhone 6, say the analysts. “While we expect limited 5G network coverage in the US will initially temper consumer demand for iPhone 5G in the front half of 2021, as 5G coverage and performance improves in the back half of the year, we believe it will spur a multiyear iPhone upgrade cycle versus the typical one-year cycle.”
Finally, the analysts agree that Apple will grow within new business segments, including expanded hardware subscription offerings and the recently-popular rumour of the automotive and broader transportation opportunity.
“If Apple were to build a car, it’s unlikely it would be released before the 2024 target cited in the recent Reuters report. That said, we expect investor optimism regarding Apple’s auto play to increase in 2021, driven by sporadic reporting on the topic.”
FAANG refers to the stocks of five prominent American technology companies: Facebook, Amazon, Apple, Netflix, and Alphabet. The term was coined by Jim Cramer, the television host of CNBC’s Mad Money, in 2013, who praised these companies for being “totally dominant in their markets.” Until 2017, FANG was limited to Facebook, Amazon, Netflix, and Alphabet. Another variant of this acronym is “FANGAM,” which includes Microsoft.
Apple has come out with new upgraded products, the M1 Macbook Pro and Airpods Max just to name a few. Also, the iPhone 12s were a smashing hit this year. With the hard push for Apple to capture market share within the services industry as well, through its offerings of Apple TV, Music, News, and Games, it’s understandable to see where and how Apple’s growth will continue. Apple is already the most valuable publicly traded company, and it will be able to continue delivering high-quality products to its loyal customer base.