AAPL Stock Prediction: 0%-Interest iPhone Installment Plan Is A Tailwind for Apple

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

Summary:

  • Apple’s stock is now a buy because it is willing to be more aggressive in marketing its pricey iPhone products.
  • The big decline of iPhone sales in China last year is being addressed through lower price tags and 0% interest installment plans.
  • The interest-free iPhone installment plan is implemented through Ant Financial, a subsidiary of Alibaba.
  • The more iPhones it can sell, the better it is for Apple’s fast-growing Services revenue segment.
  • The predictive algorithm of I Know First has a very bullish 12-month forecast for AAPL. Weekly technical indicators and moving averages hints AAPL is a buy.

Apple (iPhone) has a debilitating headwind in notably weakened iPhone sales in China. Tim Cook blamed China as primary reason why Apple has shortfall in iPhone sales. The holiday quarter earnings report was upsetting because 4Q2018 China iPhone sales went down by -19.9%.  This is depressing because the China market accounts for 18 to 20% of Apple’s revenue. The two charts below explained the severity of Apple’s China problem.

 

Apple’s Q1 2019 (Q4 of 2018) revenue from China iPhone sales plunged to $13.2 billion. This was 36.4% lower than Q1 2018’s $18 billion. The steep dive in China is why Apple’s Q1 posted a -15% Y/Y dip in total iPhone revenue to $52 billion.  It is only judicious therefore for Apple to be more aggressive in marketing iPhones in China.

How Apple Is Addressing The China Difficulty

Tim Cook hinted last month that cheaper iPhones is highly likely this year. It’s a no-brainer for Apple to lower the price tags of its iPhone XS and iPhone XR handsets. Chinese firms like Huawei, Xiaomi, Oppo, and Vivo are offering sub-$500 flagship smartphones. The Xiaomi Mi 9 is less than $500 but it has better camera/video performance and is the fastest smartphone to date.

Xiaomi became no.1  in India. Apple never made it to the top 10 in India for the past five years. This is due to the overpricing of iPhones versus Chinese flagship Android phones. Perhaps after solving the China headwind, Apple will refocus its strategy in India. India now accounts for 10% of global smartphone sales.

While the rest of the world saw a 9.7% decline in smartphone shipments, India posted a 14.5 Y/Y growth last year.

The easiest way for Apple to disrupt the massive sales of Huawei and Xiaomi is for it to lower the price tags of its flagship phones. It is hard to grow sales of $1,000 and $800 iPhones when Xiaomi and Huawei can sell equivalent handsets at less than $500.

The other solution that Apple hopes to reverse the iPhone’s decline in China is zero percent installment plans for new iPhone buyers. This China-exclusive offer is in partnership with Ant Financial – the payments processing firm owned by Alibaba (BABA).

Chinese customers can buy an iPhone XR via installment payments of 271 yuan ($40.71) per month. The monthly installment payment for iPhone XS is 362 yuan ($53.92). The iPhone XR retails for 6,499 yuan ($968) in China. The iPhone XS sells for 8,699 Yuan ($1,295.61).

Other banks in China are also offering the same interest-free iPhone installment plans for Mainland Chinese. This special promo from Apple should help reverse the decline of the iPhone in China. Going forward, Apple can become a top vendor in India if it also offers the same zero-percent installment iPhone plan. Heck, this could be a massive sales booster for global iPhone sales if Apple offers this promotion in all countries.

Why Apple Needs To Sell More iPhones

Cheaper iPhones and 0% interest installment plans are necessary toward selling more iPhones. Apple needs more people using iOS devices to further increase the momentum of its fast-growing Services business segment. The more active users of iPhones, Apple TV, iPads there are, the bigger Apple’s income from iTunes app store sales and subscription payments.

The Services segment is now a $37.2 billion/year catalyst for Apple.

Apple Music and the upcoming paid streaming TV/video service are iOS/macOS exclusives. My takeaway is that Apple can sacrifice its high margins on hardware products because it can recoup this via increased in-app purchases and subscription payments.

Conclusion

Apple lowering its margins on iPhone hardware sales is a strong reason to stay long (or buy more) AAPL. Lower price tags and interest-free iPhone installment plans can boost the sales of iPhones in China and in any country.

My buy rating for AAPL is backed by its bullish one-year predictive market trend forecast from I Know First. AAPL’s market trend score is above 100 (178.42) and I Know First’s predictability score for AAPL is 0.76. I Know First has a great history of correctly predicting 12-month market movements of Apple’s stock.

How to interpret this diagram.

Further, I checked the weekly technical indicators and moving averages. They suggest AAPL as a buy right now.

(Source: Investing.com)

Past I Know First Success with Apple Stock Forecast

I Know First has been bullish on AAPL shares in past forecasts. On September 8, 2017, the I Know First algorithm issued a bullish 1 year forecast for AAPL with a signal of 165.93 and a predictability of 0.61, the algorithm successfully forecasted the movement of the AAPL share.  After a year, AAPL shares rose by 37.23% in line with the I Know First algorithm’s forecast. See chart below.

This bullish forecast for AAPL was sent to I Know First subscribers on September 8, 2017.

To subscribe today click here.

 

Please note-for trading decisions use the most recent forecast.

Apple Stock Prediction: Why Apple Will Release A New Mac Mini This Year

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology – Senior Analyst at I Know First.

 Summary:

  • In spite of year-over-year declines in quarterly revenue and net income, Apple’s stock still jumped 5% during after-hours trading after its Jan. 29 ER.
  • iPhone’s quarterly revenue was down -15% Y/Y but Mac’s revenue was up 9% Y/Y. Revenue from iPad was up +17% and Services was up +19% Y/Y.
  • The strong sales growth of the iPad and Services segments convinced me that Apple will really release a new low-cost iPad Mini and iPad 9.7 inch this year.
  • Office productivity, mobile gaming, and watching streaming movies is still better on an iPad than on an iPhone.
  • Adobe will release an iPad/iOS native version of Photoshop CC this year. A $200 iPad Mini 5 with 7.9-inch screen is perfect for professional photo editing.

I was proven correct when I said that Apple (AAPL) will release a new Mac Mini in 2018. Last year’s release of an updated/improved Mac Mini helped the Mac segment deliver a +9% year-over-year (Y/Y) increase in quarterly revenue. Based on the holiday quarter earnings report of Apple, Mac segment earned $7.4 billion in Q1 2019.  Creative professionals like me love the Mac Mini because it is better than a MacBook (overheats during prolonged use) for graphic design/video editing/content creation.

Services Q1’ revenue was up 19% Y/Y ($10.9 billion), and iPad also delivered +17% Y/Y growth ($6.7 billion). This outstanding performance by the three segments of Apple definitely helped boost AAPL’s price by as much as 5.23% during the January 29 after-hours trading, post-ER.

[su_lightbox type=”image” src=”https://iknowfirst.com/wp-content/uploads/2019/01/AAPL_YahooFinanceChart-1.png”][su_tooltip style=”bootstrap” position=”west” rounded=”yes” content=”Click to enlarge”][/su_tooltip][/su_lightbox]

(Source: Yahoo)

China trouble was largely responsible for the big -15% Y/Y drop in quarterly iPhone revenue ($52 billion). Apple only managed to rake in $13.2 billion from iPhone sales in China in Q1 2019. This is almost $5 billion lower than what it made in Q1 2018 China iPhone sales.

The upbeat reaction during the post-ER after hours trading for AAPL convinced me that investors now better appreciate the non-iPhone revenue streams of Apple. The iPhone is tanking but the other segments – Wearables, Mac, iPad, and Services are all growing.

Please study the official chart below released by Apple for its Q1 2019 earnings report.

(Source: Apple)

The growing revenue streams from the iPad and Services segments convinced me that Apple will really release a new affordable (maybe $200) iPad Mini this year. The release of a $29/$329 9.7-inch iPad last year was responsible for the boost in quarterly iPad revenue.

Apple, The Entertainment Company, Needs The Mac Mini

Common sense tells me that mobile gaming and watching streaming movies and TV shows is still better on the iPad Mini’s larger screen display (than on the iPhone XS/iPhone XR). The larger size of the iPad Mini makes it also better in heat management than on an iPhone. The iPhone XR noticeably overheats when used during prolonged mobile gaming and movie watching.

The iPad Mini is vital to the future of Apple as a gaming and entertainment services provider company. Learned investors should now forget Apple as the iPhone company. Apple is now a leading video games and entertainment company.

A $200 7-9-inch iPad Mini 5 with Apple’s older A10x Fusion processor will make it the best mobile gaming device. Even the even older A10 Fusion processor is already a decent gaming System on Chip (SoC). The graphics performance of the A10 Fusion processor is better than the high-end mobile SoC Tegra K1 from Nvidia (NVDA).

(Source: Notebookcheck.net)

Due to the usually-affluent category of iPad/iPhone owners, Apple is the largest beneficiary of the $61.3 billion/year mobile games industry. The Services segment’s quarterly revenue of $10.875 billion is largely due to Apple iTunes’ 30% cut from money spent by iOS gamers. However, Apple’s video streaming service will soon grow to be a decent contributor to the company’s topline.

I reiterate that an iPad Mini is the best iOS gaming device that can help Apple increase its 30% cut revenue stream from the world’s top-grossing free-to-play (freemium with in-app purchases) mobile games. Unlike Google (GOOG) Apple is enjoying a 30% cut from the estimated $70 million monthly gross revenue of Fortnite iOS. Apple do not allow app/game developers to use its iOS platform outside its iTunes platform.

(Source: SuperData Research)

Conclusion

The iPad and the iPad Mini is important to the fast-growing Services segment of Apple. The iPad Mini;s affordability will also help boost the growing iPad segment revenue. Apple is now a video games and music/video entertainment company. Two years from now, the combined annual revenue from the other business segments of Apple may overshadow iPhone sales. An Apple less reliant on iPhone revenue becomes a much better long-term investment.

I rate AAPL as a buy. I Know First’s stock-picking AI algorithm has a bullish one-year market trend forecast for Apple’s stock.

Apple still trades well below the average 12-month PT of $183.98 made by TipRanks-tracked professional analysts. Going long on AAPL might prove very rewarding after a one-year period.

(Source: TipRanks)

Past I Know First Success Forecast

The following forecast refers to a previous successful I Know First algorithm prediction that gave a bullish long term outlook for AAPL which was included in a premium article on how the trillion dollar app economy is boosting Apple. The prediction was bearish in the short term, but saw a positive upside over the 1 year time horizon with a signal of 116.66 and a predictability indicator of .62. The Algorithm correctly predicted Apple’s share trend. 

To subscribe today click here.

Please note-for trading decisions use the most recent forecast. 

Apple Stock Forecast: Why The Apple Mac Mini And iPad Mini Deserve Upgrades

Apple Stock Forecast

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Summary:

  • Warren Buffet’s revelation that his Berkshire Hathaway bought 75 million more Apple shares in Q1 boosted the stock beyond my 12-month price target of $188.
  • I was correct to say that the $100 billion stock repurchase program was a strong incentive for long-term investors like Buffett to fall in love more with Apple.
  • I would like to discuss now the importance of updating the other products of Apple. Apple needs to take care of its loyal horde of Mac Mini and iPad Mini customers.
  • The availability of Intel’s Kaby Lake-G Core i7 and Core i5 with on-package AMD Radeon RX Vega M should compel Apple to produce an upgrade to the 2014-era Mac Mini.
  • The iPad Mini 4 is also almost three years old. It deserves a 2018/2019 version. The 8-inch form factor of the iPad Mini makes it a comfortable gaming device.

Apple (AAPL) has already delivered my previous 12-month price target of $188. It is justified to do some profit-taking now. The reason for AAPL’s quick rise to above $188 is due to Warren Buffett’s May 3 evening revelation that his Berkshire Hathaway team bought 75 million more Apple shares in Q1 2018. Buffett raising his bet on Apple obviously inspired institutional investors and hedge fund managers.

AAPL’s closing price rose from $176.21 in May 3 to $188 by May 11. AAPL even hit a new 52-week high of $190.37 on May 10.

(Source: Yahoo Finance)

I was correct to claim that the $100 billion stock repurchase plan of Apple was aphrodisiac to long-term value investors like Warren Buffett. Warren Buffett or his Berkshire Hathaway obviously suspected prior to the Q2 FY 2018 earnings report that Apple will allocate a massive portion of its cash from abroad for stock buybacks. Apple only announced its $100 billion share buyback program after it did its Q2 earnings report last May 1.

I do not have any real evidence but Berkshire Hathaway bought 75 million  AAPL shares in the first quarter of this year because it already got a hint from Apple’s management that it will allocate $100 million for share buybacks. Buffett has always been in love with the value presented by share buybacks.

Apple Has To Buy Back Loyalty of Disgruntled Mac Mini And iPad Users

I now would like to discuss the value in Apple upgrading its long-disregarded products. I am sure Mr. Buffett will agree that there are long-term benefits to fulfilling the needs of long-time Apple Mac Mini and iPad Mini customers. There’s long-term reward in buying back the loyalty and spending power of frustrated Mac Mini and iPad Mini users who bought other brands because Apple is very tardy in upgrading its small form Mac computer and iOS tablet. The last update to the Mac Mini was in 2014. The iPad Mini 4 was released in 2015. These two products obviously were discarded to the low priority list of Apple.

The Importance of the Mac Mini

The late Steve Jobs himself was the proud presenter of the first Mac Mini small form factor Mac computer in 2005. Jobs called it a very tiny but robust computer. My takeaway was the Mac Mini was Mr. Jobs’ effort to cater to people who can’t afford an iMac or Mac Pro.

It was also a clever way to persuade Windows loyalists to buy a Mac computer that can work with any third-party peripherals. Apple offered the first version of the Mac Mini for just $499. It was a successful marketing strategy in converting many Windows users to switch to the Mac system.

The bottom line is it was Apple’s Mac Mini design that inspired Intel (INTC) to create its Next Unit of Computing [NUC] reference design for tiny Windows/Linux computers. Unfortunately, the death of Steve Jobs made the Mac Mini a non-priority product under Tim Cook. This is the reason why the Mac Mini’s development is now far behind its Windows NUC counterparts.

I used to own an x86 Mac Mini 2006 version but it died from overheating due to its long years of service as a video & photo editing workstation. I still have a 27-inch iMac 2007 version that still works but it is currently in unused status along with my electric guitar. My point is Apple is slow in updating its Mac products compared to its Windows PC rival companies.

Frustrated Mac Mini customers found better small form factor computers from Windows-centric manufacturers. It was also easy for me to create a cheap hackintosh Mac OS X 10.7.5 using a $300 NUC from Gigabyte. Other graphic artists I know made Mac OS X Sierra hackintosh computers from sub-$500 NUC computers.

There are millions like me who will only buy a Mac Mini again if Apple makes a 2018 or 2019 upgrade to its 2014 Mac Mini. Apple can make an entry-level and high-margin Mac Mini models now that can appeal to 100 million PC gamers, CAD (Computer Aided Design) artists, video editors, content creators, game developers, and web designers/graphic designers.

Intel’s Kaby Lake G Core i7 and Core i5 has on-package Radeon RX Vega M GPUs (Graphics Processing Units). This Intel design can match the graphics performance of a GTX 1060 GPU from Nvidia (NVDA). Add 16GB of DDR4 RAM and a $1,199 Mac Mini can already be a decent graphics workstation machine or a gaming PC.

A Mac Mini that has Kaby Lake G Core i7 can match or even outperform Intel’s Hades Canyon design. The Hades Canyon tiny computer scored 363,499 under the Ice Storm Unlimited Graphics test of FutureMark 2013. The chart below also illustrates how a Kaby Lake G-equipped Mac Mini could also be a decent CAD workflow/graphics design workstation.

(Source: AnandTech)

Sad but true, there are millions more creative industry professionals who would have stayed on the Mac platform if only Apple did not forget the development of the Mac Mini computer.  The stiff global competition for graphic design, CAD layouts, and game developments projects made creative professionals and content creators be more cost-conscious. It is really hard to justify investing in $3K iMacs or $5 Mac Pro machines when contractual website development or UI/UX design jobs only offer 20 to 30% operating margins.

I sold a $3.5 Mac Pro before because it was too pricey a machine for doing $5 logos, $40 wedding video editing projects, and $30 wedding album Photoshop layout jobs. Apple’s Mac business doesn’t have to cater to mid-tier and high-end models only. The sub-$700 Mac Mini is an entry-level machine that can appeal to a lot of gamers and creative professionals.

The iPad Mini Is Apple’s Perfect Mobile Gaming Device

I will buy 750 more AAPL share if Apple also updates a new version of the iPad Mini 4. The 8-inch design of this tablet makes it the perfect mobile gaming machine. Apple needs to improve the cooling system of the iPad Mini and it can be the best mobile gaming device on the planet today. I also overheated an iPad Mini 4’s motherboard from excessive gaming (4 to 8 hours every day of continuous playtime). Mobile Legends, Arena of Valor, Injustice 2 were all my favorite overheating-inducing iOS games.

My point is that Apple can reduce costs of replacing under-warranty damaged iPhones. Excessive gaming is usually the culprit why less than 1 year old iPhones go kaput. The iPad Mini 4 was a great gaming device that will not overheat if you do not play it continuously for 6 hours.  Older gamers (35 years old and above) also have weaker eyesight that needs bigger-screen devices to play comfortably.

By keeping the iPad Mini updated with the latest CPU/GPU chips and advanced cooling systems, Apple has a durable/reliable device for serious mobile gamers.

A $249.99 iPad Mini 5 with A10X Fusion chip can be the best mobile gaming gadget. The top-grossing Fortnite and PUBG Mobile iOS Battle Royale games are obviously suited to larger devices like the 8-inch iPad Mini. The 4.7-inch display of an iPhone is just too small to see and shoot fast-running opponents.

Apple should also take into account that the tablet is an important platform that generates $13.9 billion in gaming revenue.

(Source: Newzoo)

Conclusion

Apple must never disregard the potential long-term contribution of the Mac Mini and iPad Mini. These entry-level products can actually enable their owners to earn more money so they afford to buy flagship products like the Mac Pro and iPad Pro.

Its bullish one-year market trend forecast score backs my buy rating for AAPL. I Know First has a high 0.7 predictability score on the one-year forecast tab for AAPL. It means I Know First’s stock-picking algorithm has an excellent history of correctly predicting the 12-month market performance of Apple’s stock.

 

Past I Know First Success With Apple

I Know First has been bullish on AAPL shares in past forecasts. On May 21, 2017, I know First Analyst wrote about AAPL. Since then, AAPL shares have gained 23.20%. See chart below.

This bullish forecast for AAPL was sent to I Know First subscribers on May 21, 2017

To subscribe today click here.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Amazon Stock Predictions


Netflix stock predictions

Apple Stock Forecast: Why Project Marzipan Is Important To Apple’s Future

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First.

Apple Stock Forecast:

Summary:

  • Apple is gradually losing the K-12 education PC market due to Google’s Chromebooks.
  • Chromebooks are now even more attractive because they can run Android apps/games.
  • It is no surprise that Apple is also intent on letting x86 Intel Macs run iOS games and apps.
  • Project Marzipan is Apple’s in-development solution to allow iPad/iPhone apps run on macOS X computers.
  • Thanks to the Virtualization Technology of Intel’s x86 processors, Apple will likely deliver the promise of Project Marzipan.

Apple (AAPL) wants to make its Mac computers more attractive and useful. Its upcoming Project Marzipan solution will allow macOS computers to run iOS apps. Apple is merely trying to replicate Google’s (GOOG) successful implementation of running Android apps on Chrome OS computers. Apple is losing the K-12 education market to Chromebooks. I am confident that more college/high school IT administrators will consider buying macOS computers again if they can run iOS apps.

Mac OS X computers now only account for 3.5% of the K-12 mobile computing shipments. However, I suspect that Macs are still the preferred computers of college students. The lack of built-in keyboards of iPads makes them a hassle to use for long-form writing/typing. Giving Macs the ability to run any iOS application makes them more useful to students and business professionals.

Sad but true, the neglected state of the Mac App Store means there’s limited availability of education/business applications. By bringing iOS apps and games to macOS computers, Apple’s PC products can compete better against Chromebooks and Chrome OS desktop computers. There are now 2.1 million iOS apps/games available from iTunes. Some of them are likely useful for students, home users, and business users.

Apple sold 19.25 million Macs last year. By making future Macs compatible with iOS software, Apple could attract more buyers. My 3-year forecast is that Apple could hit the 25 million units sold milestone. The bigger screen sizes of the MacBook and iMac makes them suitable for hardcore mobile gamers. Continuous gaming on the iPhone/iPad also causes overheating which reduces their device lifetime.

Project Marzipan Is Coming Soon

Project Marzipan is supposedly going be implemented this year. This is realistic. Intel (INTC) processors have Virtualization Technology. All Macs now use Intel x86 processors. Current Mac computers are capable of running emulated iOS apps. The process is similar to how easy it was for third-party developers to create so many Android OS emulators for Windows and macOS computers.

It is actually possible to run iOS apps now on Mac even without Project Marzipan. Problem is you have to download and install Apple’s software development IDE, Xcode. All iOS developers use the powerful iOS simulator tool of Xcode to test their games/apps. However, downloading Xcode requires you to sign-up as a software developer.

My guess is that Apple will update macOS High Sierra to include an integrated iOS emulator that anyone can use. Since Apple itself is creating the emulator, I expect macOS computers to run iOS apps at near-native speed. Apple has expanded support for its own Metal API for the Mac. Playing advanced 3D iOS games on the Mac should not be a problem.

Why Apple Cannot Afford To Lose The Education PC Market

Winning back the education market is very important to Apple’s future. The students of today are going to be the workers, managers, and leaders of tomorrow. If Apple lets Google continue its dominance in the K-12 and college PC markets, students will be trained in Google’s productivity/collaboration software and Chrome OS ecosystem.

Going forward, Google-trained students means they will be the employees who will require Chrome OS and Android devices. The said future scenario is bad for Apple and its shareholders. Yes, Apple currently has tens of millions of loyal fans. However, Apple needs to retain a strong presence in the education market to keep its brand alive among young people.

The future of Apple will depend on how appealing/useful its products will be to the future citizens of the world.

Conclusion

The app ecosystem dictates the long-term success of computing platforms. The Mac App Store cannot match the software diversity and size of the iOS app store. Apple, therefore, is correct to implement emulation of iOS apps on the Mac. Project Marzipan can revive the flailing Mac App Store platforms with the massive ecosystem of 2.1 million iOS apps/games to the Mac platform.

A larger app ecosystem for the Mac makes it more useful. Consequently, its future sales could improve after Project Marzipan is finally implemented this year. Better sales performance from its Mac computers can help Apple offset further weaknesses in iPhone/iPad sales.

The Mac business accounts for 7.81% of Apple’s quarterly revenue. This figure could rise after Macs become iOS apps-friendly.

(Source: I Know First)

Past I Know First Forecast Success with AAPL

I Know First’s algorithm has made accurate predictions on AAPL in the past, such as my bullish article published on July 5th, 2017.  In the article, it outlines Apple’s many won accolades. For some people, Apple has the best smartwatch, headphones, smartphone, tablet, computer, and app store. Tim Cook’s reign also saw Apple’s ascendance as the most valuable company in the world. Apple sells luxury-priced consumer electronic products and is making tons of money doing it. At the time, Apple dethroned Wal-mart (WMT) to become the second-biggest online retailer in America, according to eMarketer’s trailing 12 month period ending last March 2017. Apple did e-commerce sales of $16.8 billion in the U.S., beating Wal-mart’s $14.3 billion. Additionally, the article mentions Tim Cook should be commended for making Apple an exemplary model for e-commerce. Unlike Amazon which specializes in thin-margin products, Apple sells pricey products online.

Since then, AAPL shares have risen 18% in line with the I Know First algorithm’s forecast. See chart below.

[Source: MorningStar, April 10th, 2018]

I Know First has positive 3-month and 1-year algorithmic forecasts for AAPL. I am therefore endorsing Apple’s stock as a buy. Based on the high predictability scores (0.7 and 0.82), I Know First has a long history of accurate predictions for AAPL’s 3-month and 1-year market movement.

Furthermore, my buy rating for AAPL is in line with its bullish monthly technical indicators and moving averages.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

Amazon Stock Predictions


Netflix stock predictions

Apple Stock Outlook: Google’s Money Is Helping Finance Apple’s Research On Self-Driving Cars and Augmented Reality

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Apple Stock Outlook

Summary:

  • Bernstein analyst A.M. Sacconaghi Jr. estimated that Google paid Apple $3 billion to remain the default search engine on the iPhone/iPad.
  • This is triple the annual $1 billion payment that Google used to pay Apple three years ago to keep its default search engine status on the iPhone/iPad.
  • Google’s willingness to pay triple validated just how important Apple’s mobile ecosystem is to advertising-dependent companies. Apple’s iOS ecosystem is indispensable to Google.
  • The estimated $3 billion payment from Google helps pay for the estimated $3 billion that Apple is spending annually on self-driving cars and Augmented Reality research.
  • In spite posting a new high last week, AAPL still has a bullish one-year algorithmic forecast. This stock could still post a new 52-week within the next 12 months.

An analyst from Bernstein reported earlier this month that Apple (AAPL) could have gotten $3 billion  from Google (GOOG) in FY 2017. This reported $3 billion payment is in exchange for Google retaining its right to be the default search engine on Apple’s smartphones and tablets. The $3 billion estimated annual payment from Google helps finance the estimated $3 billion that Apple is spending on Artificial Intelligence and Augmented Reality research.

It was revealed  in 2014 that Google paid $1 billion per year to Apple but the previous deal expired in early 2015.

Google obviously offered more money to Apple to beat Microsoft’s (MSFT) Bing. Google will continue to monetize mobile search engine queries of iPhone/iPad users for many years to come. Yes, Apple doesn’t have a search engine or a robust mobile advertising services platform, but it still is a beneficiary of the $22.18 billion/year U.S. mobile search advertising industry.

apple stock predictions

Source: https://www.invespcro.com

Apple’s has obvious long-term economic benefits because Google’s search engine accounts for 95% of the U.S. paid search advertising on smartphones.

Why Investors Should Really Care

In the U.S., 75% of Google’s search engine advertising revenue is generated from iOS devices. It is only fair that Apple is now reportedly getting $3 billion per year from Google. Getting a larger share of the mobile search advertising revenue from Google is a small but important tailwind for AAPL. Google’s long-term advertising success has trickle down benefits to Apple.

apple stock predictions

Source: https://www.invespcro.com

The deal between Google and Apple might also be pro-rated based on Google’s total annual mobile search advertising revenue on the iOS platform. In short, Apple’s annual payment from Google could also grow larger than $3 billion in the coming years. Google gained $11.45 billion in U.S. mobile search advertising last year. Its estimated revenue will grow to $13.74 billion this year. I believe Apple will accordingly get a higher annual payment from Google for the next succeeding years.

Google’s willingness to pay $3 billion+++ per year to keep its default search engine status fortified the importance of the iOS ecosystem to the mobile advertising industry. Apple’s hundreds of millions of iPhone/iPad users belong, more often than not, to the middle-class and upper-class sectors of consumers. Google therefore has very compelling reasons to keep paying Apple big money to retain its default search engine status on mobile Safari.

$3 Billion Is A Lot Of R&D Money

Apple has decided to postpone indefinitely its ambition to build its consumer-grade self-driving cars. However, the company is still intent on researching and developing software and the cloud platform for autonomous driving cars. The $3 billion search engine-related payment from Google is a lot of money to finance development of this venture.

Going forward, Apple needs to spend big money on R&D to accelerate its software-based and Artificial Intelligence-enhanced self-driving car technologies to keep up with Google, Nvidia (NVDA), and Baidu (BIDU). The more money and manpower it can pour on this segment, the faster it could catch up with the leaders. Intel (INTC) paid more than $16 billioin for Mobileye just to boost its footprint in self-driving cars.

The autonomous vehicle business is definitely a new fashionable tech growth industry that Apple must get involved in quickly. The $3 billion/year from Google could also help Apple fund more third-party acquisitions to improve its car-related Artificial Intelligence efforts.

Apple will also probably have to research car-specific processors and sensors to complement its software for self-driving vehicles. Nvidia, Mobileye, and Qualcomm (QCOM) are years ahead when it comes to car-centric processors. I do not think Apple can build its proprietary software/cloud platform for self-driving cars without its own proprietary processors/sensors.

Conclusion

Getting $3 billion/year from Google is not going to move Apple’s stock. However, it could accelerate Apple’s research on Augmented Reality and self-driving car technologies. These two developing are future diversification areas for Apple. Apple cannot forever rely on its iPhone revenue to propel its future growth. It needs to get involved on the new tech fad, self-driving cars and AR. Riding on what’s popular helps motivate investors to remain bullish on AAPL.

AAPL already posted a new record high of $162.51 last week.  However, next month could deliver the iPhone 8 that everybody dreamed about. Apple coming up with a real major upgrade to the iPhone 7 next month could propel the stock to a new 52-week high. It could even hit $170 if Tim Cook announces there would be enough global supply for the iPhone 8 before September ends.

AAPL remains a buy. It has outperformed Google’s YTD return. AAPL’s YTD gain could hit +42% after 2017 ends. I will remain long AAPL as long as Warren Buffett remains long AAPL.

apple stock predictions

(Source: Morningstar)

My bullish outlook for Apple is complemented by the very positive one-year algorithmic forecast from I Know First. Staying long or buying more AAPL shares (and keeping them for one year or more)  could turn out to be rewarding for patient investors.

apple stock predictions

Past I Know First Forecast Success with AAPL

I Know First’s algorithm has made accurate predictions on AAPL in the past, such as its bullish forecast published on January 17, 2017. In the article, it explains that despite the critics and the tough competition Apple had to deal with, the company succeeds to impose its brand as a key player in its field. The bullish signal identified by the algorithm is strengthened by different facts. Since the forecast’s release, the stock has increased by 34.22%.Apple Stock Predictions

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

apple stock predictions


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Apple Stock Forecast: Long-Term Benefits For Apple From Fast-Rising Mobile Games Industry

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Apple Stock Forecast

Summary:

  • The world spent $44.8 billion on mobile apps last year. This industry helped Apple improve its Services revenue by 24% during the most recent quarter.
  • Apple does around 70% of the global apps business.
  • Apple takes 30% commission from app store and in-app purchases done through iOS devices.
  • Strong revenue stream from iTunes App Store could inspire Apple to reduce prices of its iPhone and iPad products in China and other developing markets.
  • I Know First gives AAPL very positive buy signals based on its near and long-term algorithmic forecasts.

Apple (AAPL) device owners helped spent $44.8 billion on mobile apps last year. As a vendor of high-end phones and pricey tablets, Apple’s client base is full of well-to-do people with extra spending power. Expect the people who can afford $700 iPhones to spend $50-$300 every year on iOS apps.

The revenue from Apple’s 30% cut over iOS app store purchases is tremendous.  Hit mobile games like Pokemon Go (released only last July) generated $950 million in revenue in 2016. The 9-figure annual commission on in-app purchases can help Apple offset its declining Mac and iPad business segments. Services, where the iTunes App Store belongs to, grew 24% in Q4 with $6.3 billion in revenue.Apple Stock Prediction

Source: Newzoo

Apple device owners spent $240 million in January 1, 2017 on iTunes App Store, setting a record. The addictive nature of hit mobile games like Game of War: Fire Age, Clash Royale, and Candy rush Saga means iPhone/iPad owners will remain repeat in-app buyers for many years to come.

In America alone, iPhone gamers are spending approximately $7.78 million everyday on the top-10 grossing iOS games.  Apple therefore gets $2.33 million everyday of almost-cost free, easy money from American iPhone gamers.

(Source: ThinkGaming)

Mobile Apps Industry Is Still Growing

Based on the projection of Superdata Research, the business of mobile apps is also predicted to grow to $54.5 billion by 2019. Apple therefore can rely on this particular industry to fuel growth for its Services segment for the next three years.

(Source: Superdata)

On this note, Apple has to improve its iTunes App Store platform to encourage more iPhone/iPad owners to do in-app purchases or app store subscriptions. I suggest Apple allows iPhone owners with cellular service subscriptions to do app store purchases through carrier billing, not just through credit card payments.

There are iPhone/iPad owners in China, India, and Africa that cannot qualify for credit card applications. They do qualify for carrier subscriptions.

App Store Revenue Could Help Reduce Prices of iPhones, Macs, and iPad Tablets

There are fewer Apple mobile device than Android device users. However, according to App Annie, the iOS app store did 70% of the estimated $44.8 billion spent on app/games last year. It helps that Apple has an official app store in China, while Google (GOOG) has none. China is now the biggest market for mobile apps, worth $10 billion last year.

If we guesstimate that China’s 50% of China’s mobile apps industry went through the iTunes App Store there, Apple could be deriving $1.5 billion in annual commission. Getting $1.5 billion every year from Chinese in-app purchases could help Apple reduce the retail prices of its phones and tablets there.

Apple’s declining iPhone business in China is likely due to rising competition from much more affordable high-end Android phones made by Xiaomi, Huawei, Lenovo, and Vivo. The strong revenue steam from global iTunes App Store could subsidize a global-wide price reduction of iPhone and iPad products to help them compete better.

Conclusion

Apple’s stock went down by more than 2.5% after it did its earnings report today. It might go lower when market opens on Friday. Investors should try for a cheap buy-in window to purchase AAPL. I rate this stock as a strong buy for the long-term horizon.

On the other hand, I Know First’s short and long-term algorithmic forecasts for AAPL are all positive. The stock could shoot up to $125 within the next 30 days or 90 days.

I Know First Algorithm Heatmap Explanation

The sign of the signal tells in which direction the asset price is expected to go (positive = to go up = Long, negative = to drop = Short position), the signal strength is related to the magnitude of the expected return and is used for ranking purposes of the investment opportunities.

Predictability is the actual fitness function being optimized every day, and can be simplified explained as the correlation based quality measure of the signal. This is a unique indicator of the I Know First algorithm. This allows users to separate and focus on the most predictable assets according to the algorithm. Ranging between -1 and 1, one should focus on predictability levels significantly above 0 in order to fill confident about/trust the signal.

There are 26 TipRanks-tracked Wall Street analysts that also rate AAPL as a strong buy. Their average consensus 12-month price target for AAPL is $136.61.

Apple Stock Forecast

(Source: TipRanks)

I Know First Pass Success With AAPL

I Know First has been bullish on AAPL shares in past forecasts. On October 31st, 2016, an I Know First analyst wrote a bullish article on Apple Inc. in accordance with I Know First’s self-learning algorithm. The analyst wrote about a growth in iPhone sales during the 2016 holiday sales. In accordance with the algorithmic forecast, AAPL shares rose 7.23% to date.

The bullish forecast on AAPL was sent to I Know First subscribers on October 30th, 2016. To Subscribe today click here.


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Apple Stock Analysis: Holiday Shopping Season Will Boost Apple’s Sales

motek 1The article was written by Motek Moyen Research Seeking Alpha’s #1 Writer on Long Ideas and #2 in Technology  – Senior Analyst at I Know First

Apple Stock Analysis

Summary:

  • It’s time to go long AAPL. The Christmas shopping season is here soon.
  • The global recall of Galaxy Note 7 and holiday sales could make up for the declining iPhone sales in China.
  • I expect the Christian/Catholic community around the world to boost sales of iPhones, iPads, and iMac computers this last two months of 2016.
  • Digitimes reported that Apple has increased its fourth-quarter production orders for the iPhone 7. I expect Apple to sell 60-70 iPhones this Q4 2016.
  • The short and long-term algorithmic forecasts of Apple are very positive.

Digitimes reported last week that Apple (AAPL) increased Q4 production orders for its iPhone 7 products. This is enough clue that Apple expects this holiday quarter to post better-than-expected iPhone sales. I therefore urge the investing public to consider going long on AAPL now.

The Christmas quarter is always the busiest period for Apple’s iPhone sales.  Apple’s stock will likely hit $120 after it reports its Q2 2017 earnings in January. The global recall of Samsung’s Galaxy Note 7 should inspire phablet-using people to go for the iPhone 7 Plus.

Winning the approval of Galaxy Note customers this last quarter of 2016 can be a new source of growth for Apple. Stronger global iPhone sales this Christmas shopping period could offset Apple’s faltering smartphone sales in China.

North American and European Christmas holiday shoppers could still deliver impressive iPhone sales in spite of the declining sales in China.

Apple Stock Analysis

Apple derives almost 70% of its revenue from iPhone sales. Any development or event which could help boost iPhone sales is therefore important.  Samsung’s batterygate problem over the Galaxy Note 7 compels me to believe that many holiday shoppers will likely buy the iPhone 7 Plus to replace their recalled Note 7 Android phone.

Yes, Samsung has also increased production of its Galaxy S7 and S7 Edge to hopefully retain the loyalty of pissed-off Note 7 owners. However, the Samsung brand is already tarnished with the exploding/fire-prone battery of the Note 7. In my view, even the Galaxy S7 and S7 Edge (which never had any battery problems) are also affected. Public perception now is that it would be safer to buy the new iPhone 7 over Samsung’s high-end phones.

Business users who love the Galaxy Note line of products could shift their affinity to the iPhone 7 Plus.  Apple’s flagship handset does not have a bundled stylus but there are cheap third-party stylus products that could work with the iPhone 7.

I am envisioning companies buying hundreds or thousands of the iPhone 7 Plus to reward their best employees this Christmas. I can imagine husbands buying the iPhone 7 Plus as gifts to their wives or children. A South Korean analyst already predicted that 100 million units of the iPhone 7 will be sold before 2016 ends. This prediction was made before the Galaxy Note 7 recall.

Samsung’s expensive recall ($4.57 billion drop in operating profits) of the Galaxy Note 7 is boon to Apple. I expect Apple to sell 60-70 million iPhone 7 units over the last two months of 2016. Apple will likely be the top beneficiary (this holiday shopping season) of Samsung’s recall of the Galaxy Note 7. The people who buy pricy phones like the Note 7 are not likely going to replace it with a sub-$400 Xiaomi Mi5 or Huawei Honor 8.

Conclusion

Unless Samsung can release a new flagship phone before December, it will be able to offer the older Galaxy S7 and S7 Edge to holiday shoppers. The iPhone 7 and iPhone 7 Plus are newer phones so they become the default choice for Christmas gift-givers.

It also helps that the iPhone 7 Plus outperforms the Galaxy Note 7. Big-spending phone buyers expect their phablet to offer the fastest performance.

Apple Stock Analysis

(Source: PC Advisor UK)

Aside from stronger iPhone sales, I expect Apple to also make a killing on selling its new MacBook Pro laptop. It’s been four years since Apple made a major redesign of its flagship laptop. Prolonged anticipation tells me that there are millions of eager customers who will line up to buy the MacBook 2016.

The October-December quarter is also the best season when Apple sells the most of its Mac products. Improved sales of the iPhone 7 and Mac computers should boost AAPL’s price to $120 in January. The near and long-term algorithmic forecasts from I Know First are very favorable for Apple’s stock. Let us trust the mighty forecasts of I Know First.  There is greater probability that AAPL will post positive returns within the next 3 months or one-year  period.

aapl2

An analysis of the long-term technical indicators and moving averages are also saying AAPL is a Buy right now.aapl3

(Source: Investing.com)

I Know First Past Success With AAPL

I Know First has been bullish on AAPL in past forecasts. On July 5th, 2016, an I Know First analyst had written a bullish article regarding Apple’s global innovation, in accordance with our state of the art algorithm. Since then, AAPL has risen almost 19% to date.

This bullish forecast on AAPL was sent to current I Know First subscribers on July 3rd, 2016. To subscribe today click here.


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Apple Stock Value: Better Cameras Make The iPhone 7 & iPhone 7 Plus Must-Have Upgrades

Apple Stock Value

An I Know First Analyst had written a bullish article regarding Apple Inc. on September 18th, 2016. Below is the summary for the article.

Summary:

  • Initial inventory of the 5.5-inch iPhone 7 Plus is sold out.
  • The basic iPhone 7 plus is $120 more expensive that the smaller iPhone 7. However, the better dual camera system is likely why more people are favoring it.
  • The best camera is what people always carry with them. The iPhone has become a worthy replacement for compact and interchangeable-lens digital cameras.
  • Anything that inspires iPhone loyalist to upgrade is good for Apple.
  • The most recent algorithmic forecasts from I Know First are hinting AAPL is still worth buying right now.

Apple Stock Value

New bets by Tim Cook on changes in cultural trends and underestimation of iPhone 7 demands, has helped AAPL shares rise over the past few weeks.

To read the full article click here.