Apple Inc. added nearly $1 trillion in market value this year. It won’t be so easy in 2024.

Next year expected to be tougher for tech giant

Apple Inc. added nearly $1 trillion in market value this year. Such gains in 2024 will be harder to come by.

As it looks to arrest four consecutive quarters of declining revenue, the world’s most valuable publiclytraded company faces uncertainty in China, where government agencies are cracking down on foreignmade devices. Competition from Huawei Technologies Co. is intensifying, while Apple’s smartwatch business faces a potential U.S. ban days before Christmas.

The stock’s 50 per cent rally this year — driven by investor bets that the iPhone maker will continue to churn out big profits regardless of the health of the economy — has also left it in expensive territory. It’s priced at 29 times profits projected over the next year, nearly double its 10-year average valuation.

“The biggest risk for the business model of the megacaps right now is money rotating to other names,” said Eric Clark, a portfolio manager at Accuvest Global Advisors, who has trimmed his position in Apple and some other big tech stocks.

Clark notes such megacaps that face higher valuations, slower growth and tougher year-on-year comparisons may see investors divert funds to “other areas that I think might have more upside for 2024.”

Traders had been sticking to bluechip tech stocks this year as the U.S. Federal Reserve raised interest rates. Now, with signals that rates may have peaked as inflation cools, investors are developing an appetite for riskier stocks as the rally broadens.

With valuations stretched, any Apple advance would likely have to be fueled by acceleration in profits. Wall Street is currently anticipating revenue growth of just 3.7 per cent in fiscal 2024 and profit expansion of 7.6 per cent, according to the average of analyst estimates compiled by Bloomberg.

Nearly unanimously bullish on big tech, Wall Street is more cautious when it comes to Apple. The stock has attracted only 34 buyequivalent recommendations. That pales in comparison to Amazon.com Inc.’s 67, Meta Platform Inc.’s 65 and Nvidia Corp.’s 59 bullish ratings.

However, not all are bearish. Wedbush Securities analyst Daniel Ives projects that the stock will be worth $4 trillion in market value by the end of next year. His Street-high price target of $250 towers over the $199 expected by analysts on average, according to data compiled by Bloomberg.