Investing

Apple Stock Tanked—Should You Buy Before January 30 Earnings?

Joey Frenette

Published: January 22, 2025 8:57 am

Shares of Apple (NASDAQ:AAPL) are souring fast, with the iPhone maker plummeting into correction territory (down just north of 14% at the time of writing) over a relentless storm of analyst downgrades.

Undoubtedly, the stock, which had blasted off to a swift 16.7% return from its November trough to its eventual December peak, has seen the gains from the nearly two-month surge get wiped out in a matter of weeks. Not too happy a new year for the Cupertino-based giant as it grapples with analysts that are turning against the firm as it heads into quarterly earnings season.

Apple is ready to report its latest quarterly results on January 30, 2025. And given the pace of analyst downgrades and the swift correction, it seems like many investors are already writing off the next quarter as a flop. With two analysts over at Loop Capital and Jefferies turning their back on AAPL shares this week, following in the footsteps of other analysts who downgraded the name earlier this month, it seems like Apple is on its way out of the Magnificent Seven.

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The Apple stock downgrades just keep coming in. They’re concerning but unsurprising.

Though only time will tell if more analysts have downgrades in store ahead of the looming quarterly earnings (I think not), I do find that shares of Apple seem to be falling on news that’s really nothing new. Indeed, we’ve heard about the sluggishness in China already. We’ve also heard about the Apple Intelligence “bust” and its failure to drive upgrades. As the Wall Street analyst herd begins to hit the downgrade button together, I think there’s a compelling case to put one’s contrarian hat on.

Some analysts are bracing for some pretty nasty iPhone sales numbers for the coming quarter. And perhaps there is a chance of a reduced outlook for the next generation of iPhones. Even Mad Money host Jim Cramer isn’t all too upbeat about Apple going into earnings. In fact, he’s “adamant” that the coming quarterly results will not be good and that a guide down for the next quarter is on the radar. Despite this, he’s not encouraging investors to dump their AAPL shares. Come the January 30 results, the stock may not have a lot further to fall, even if a miss and muted guide ends up in the forecast.

AAPL stock in free-fall. A bear market may be tough to avoid as earnings loom.

Though AAPL could be headed right back to $200 per share in the near term, I wouldn’t be so quick to hit the panic button if you’re a long-term investor looking for relative value in today’s premium-priced market. I think it’s a mistake to discount the potential for Apple Intelligence to make up for lost time going into year’s end. In its current state (iOS 18.2), it really is the worst it’ll ever be. The big question is how fast it’ll improve and whether the upgrades to come will make Apple Intelligence useful enough to convince the masses to upgrade their phones.

Personally, I think patience with Apple will be rewarded. This latest sell-off in the name feels that much more painful since the S&P 500 is off to the races with the “Trump jump” in full swing. However, a rough patch today only means that the average device stands to get older, making the case for upgrading that much stronger as we head into year’s end and into 2026.

While there may be no escaping the cyclicality of iPhone demand, I do think the sellers at these levels will run the risk of missing the next cyclical upswing, whenever this may be. In short, devices are only getting older, and Apple Intelligence (and the hardware) are improving.

The bottom line

In my opinion, a lot of the negativity surrounding this period of cyclical weakness seems to have already been baked in after the latest pair of analyst downgrades. In a prior piece, I noted that Apple tends to always ring in the new year with weakness, only to make up for lost time for the remainder of the year. Whether a year-end rally will follow this seasonal slump remains the $4 trillion question.

Either way, at this juncture, it seems like it has fallen into second place in the race to become the first $4 trillion firm, falling behind the likes of Nvidia (NASDAQ:NVDA) despite its own recent bout of choppiness. For those seeking deeper value in the Mag Seven, I think it’s hard to pass up AAPL after the latest correction while it’s going for less than 30 times forward price-to-earnings (P/E).

Given the likelihood of a quarterly disappointment come January 30, I’d personally look to wait until after the reveal before topping up a position. If the numbers really are that bad, the expectation and valuation “reset” makes the set-up for year-end look pretty good.