The Only Tech Stock You Need to Buy in 2021

The NASDAQ-100 Know-how Sector index comfortably outpaced the broader inventory market’s returns in 2020. Apple (NASDAQ:AAPL) was a giant beneficiary of that surge, because the inventory gained greater than 80% regardless of a droop in smartphone gross sales.

AAPL Chart

Apple inventory efficiency, knowledge by YCharts.

Apple’s different product traces and its booming providers enterprise helped it develop income 5.5% yr over yr in fiscal 2020, regardless of a 3.2% decline in iPhone income. In 2021, Apple might activate the warmth and ship a lot better outcomes than final yr.

The corporate is about to benefit from one of many greatest tech tendencies — 5G wi-fi know-how — in a giant manner. However Apple additionally has different methods up its sleeve. In reality, a slew of favorable know-how tendencies might make Apple one of many prime tech performs of 2021. Let’s have a look.

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Picture supply: Getty Photos

The 5G smartphone development shall be Apple’s greatest development driver

Key Apple provider Murata Manufacturing estimates that at the very least 500 million 5G smartphones could also be shipped this yr, up from an estimated 300 million models in 2020.

Apple is more likely to nook a pleasant chunk of this rising market in 2021. TrendForce expects the iPhone to account for 35% of 5G smartphone gross sales in 2021. It additionally estimates that Apple’s whole smartphone shipments might soar to 229 million models from an estimated 199 million models final yr, a possible enhance of 15%.

This bodes nicely for Apple, because the iPhone accounted for 50% of its income in fiscal 2020, which resulted in September final yr. Analysts count on Apple’s prime line to extend 15% in fiscal 2021. The arrival of 5G smartphones shall be an vital catalyst driving this development, however there are different tailwinds as nicely.

Pill and PC gross sales shall be one other catalyst

Apple’s Mac and iPad gross sales elevated in fiscal 2020. These two merchandise produced 19% of Apple’s whole gross sales. Their mixed income was up 11.3% year-over-year, and Apple will be anticipated to maintain this momentum in 2021.

Producers struggled to satisfy end-market demand in 2020 because of a scarcity of elements. So, do not be stunned to see a rise in shipments of those units this yr. IDC estimates that desktop and pocket book PC shipments might enhance 1.4% in 2021. Pill gross sales might stay practically even with final yr’s ranges, as per one other estimate.

Apple is the largest participant within the pill market, with an estimated share of greater than 56% on the finish of 2020. It’s trying to seize extra prospects in 2021 with a brand new, extra inexpensive iPad, based on provide chain sources. Apple is predicted to cost the brand new pill at $299, which might assist it take extra share from lower-priced Android rivals.

In the meantime, gross sales of Apple’s new MacBooks, powered by the M1 chip, ought to change into the next gear this yr. TrendForce estimates that the M1-powered MacBooks might enhance their share of the laptop computer market to 7% by this summer season, in comparison with 0.8% presently.

All of this means that {hardware} merchandise driving round 70% of Apple’s gross sales — iPhone, iPad, and Mac — will proceed having fun with favorable demand tendencies in 2021.

The providers enterprise has an ace up its sleeve

Apple’s providers enterprise was in effective type final fiscal yr, recording 16% development over the prior yr. It produced practically 20% of Apple’s whole income. 

This yr, the providers enterprise can profit from the introduction of Apple One: a wise transfer made by the iPhone maker to bundle numerous providers underneath one umbrella. For $15 a month, Apple One subscribers get entry to Apple Music, Apple TV+, Apple Arcade, and 50 GB of iCloud storage. Subscribing to those providers individually would price a subscriber $21 a month. Apple One additionally offers subscribers the choice so as to add Apple Information+ and Apple Health+ to the bundle, together with 2 TB of iCloud storage, for a month-to-month worth of $30.

Apple is concentrating on a number of fast-growing areas with its bundle providing. For example, the cellular gaming market is more likely to maintain the terrific development that it clocked final yr in 2021 and past. Apple One offers customers entry to greater than 100 video games, which subscribers can take pleasure in ad-free and while not having to spend cash on in-app purchases.

The private cloud storage market is poised to broaden at a compound annual development price (CAGR) of 24.6% by means of 2027, in accordance to Allied Market Analysis. Apple Music, in the meantime, is predicted to develop into the pillar of Apple’s providers enterprise.

All in all, Apple has bundled quickly rising verticals into the Apple One subscription plan. That would play a key position in attracting extra subscribers, giving the providers enterprise a shot within the arm in 2021.

Why you have to be shopping for

Apple is on observe to realize from each the {hardware} and the software program sides of its enterprise in 2021. Analysts predict 20%-plus earnings development this yr. Apple might even exceed the market’s expectations, due to overwhelming demand for the iPhone 12.

Briefly, Apple seems like a well-rounded tech inventory that’s set to profit from various tendencies, starting from 5G to the cloud to cellular gaming, giving traders a one-stop-shop to purchase into the fast development of those markets.

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