This company could be one of the most reliable long-term buys, and it's trading at a bargain compared to its rivals.
The tech industry is well-known for its wealth of growth stocks. Many industry leaders have delivered consistent and significant gains over the long term. Meanwhile, the emergence of markets like artificial intelligence (AI), digital services, and virtual/augmented reality (VR/AR) indicate plenty of room for growth in the coming years.
As the world's second most-valuable company with a market capitalization above $3 trillion, Apple (AAPL -1.62%) has a long history of growth. The company's stock is up 318% since 2019 despite a global pandemic, an economic downturn, and recent declines in product sales.
Apple has faced more than a few headwinds over the last 12 months, which have seen its stock trickle up just 11%. However, growth catalysts across tech and vast financial resources suggest a lucrative future for Apple over the long term. Moderate stock growth in recent months has kept its share price reasonable, making now an attractive time to buy.
So, here's the ultimate growth stock to buy with $10,000 right now. However, even a smaller investment is worth considering based on Apple's massive growth potential.
Apple has growth catalysts throughout the tech industry
Apple is best known for its product business, specifically the iPhone. As a result, iPhone revenue tumbling 10% year over year in the second quarter of 2024 didn't do much to excite investors. Meanwhile, declines in its iPad and Wearables divisions only exasperated concern for the company's future. However, Apple is planting seeds in sectors across tech that could pay off in the not-too-distant future.
The tech giant's second highest-earning segment is services, which includes income from the App Store and subscription-based platforms like Music and Apple TV+. The digital business has outpaced iPhone revenue for over a year, with services sales increasing 14% year over year in 2024's Q2.
The segment appears to be on track to eventually overtake Apple's smartphones as its biggest division. And the sooner that happens, the better, considering profit margins for services are at about 75%, while the same metric for products is at 37%.
Additionally, Apple has a long-term plan to boost product sales with AI. In April, Bloomberg reported the company would soon overhaul its Mac lineup to prioritize AI capabilities. The news came just days before Apple acquired French AI start-up Datakalab, which specializes in compression and embedded AI systems.
Then, on June 10, Apple announced its most significant push into the industry yet with Apple Intelligence. The platform will bring generative features to many of the company's products, including a refresh of its smart assistant Siri as it is given access to OpenAI's ChatGPT. Apple Intelligence will be exclusive to Apple's newer products, requiring an iPhone 15 Pro or later and a Mac/iPad using an M1 through M4 chip.
In addition to AI, Apple has expanding positions in high-growth industries like VR/AR and financial services. The company hit $102 billion in free cash flow last year, which was more than Microsoft, Alphabet, or Amazon. Apple has a lot of work ahead to get its product division back to growth, but it has the cash reserves to invest in its business and overcome potential hurdles.
After muted stock returns recently, now may be the time to buy
Shares in Apple increased by 48% in 2023, outperforming the S&P 500's rise of 24%. However, recent challenges have only seen the company's stock rise 8% year to date, significantly lower than many of its peers' gains. But that's not necessarily bad news for new investors.
Apple's moderate stock rise has kept its shares at a more attractive price point than other options for investing in "Big Tech."
Data by YCharts.
This chart shows Apple has one of the lowest forward price-to-earnings (P/E) ratios and the lowest price-to-free cash flow among some of the most prominent names in tech and AI. The figures indicate Apple's stock offers far more value than Microsoft and Amazon.
With expanding positions in multiple areas of tech and a booming services business, now could be the perfect time to invest $10,000 in Apple and hold this growth stock for the long term.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Dani Cook has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
