There is little doubt that Apple (AAPL 0.37%) has been a long-term winner for shareholders. Even investors who bought the stock over the past decade have been handsomely rewarded, as Apple has risen more than 800% (at the time of writing), outpacing the 180% gains of the S&P500.

But last year, Apple shareholders suffered a crisis of confidence. Investors watched as many of the company’s competitors and rivals in the artificial intelligence (AI) space posted steep gains while Apple stock failed to keep up with the broader index.

However, the iPhone maker wants to change that. Apple recently announced plans for a special event and product launch on September 9, which could be the catalyst for a price increase. Should investors buy Apple stock ahead of this high-profile event? Let’s look at what the facts suggest.

Image source: Apple.

A perfect storm

Before we answer the fundamental question about investing, it is important to take a look at the problems that caused Apple investors to lose confidence.

The most obvious problem for Apple is the company’s financial results, which have been in a doldrums for the past few years. In the nine months ended June 29, Apple’s revenue grew less than 1% year-on-year, while iPhone sales felling 1%. The previous year was equally challenging, with sales falling by 3% in the 2023 financial year.

It’s important to put these results in the context of the broader economic backdrop. Inflation has hovered near 20-year highs and consumers have been forced to make difficult choices at the gas pump and on the supermarket shelf. Given the economic challenges, it’s not surprising that consumers opted to hold onto their existing iPhone a little longer rather than upgrade to the latest model.

Another issue that has put pressure on Apple stock is the monumental sale by long-time shareholder and supporter Warren Buffett. The famous investor and Berkshire-Hathaway The CEO has sold Apple stock for three consecutive quarters, shedding around 56 percent of his holdings. And this from the man who said just last year, “It’s simply a better business than any we own.” Buffett suggested the sales were for tax reasons, but that didn’t stop fair-weather investors from making a run for the exits.

This combination of factors has weighed on Apple stock, but that could soon change.

“It’s Glowtime”

Just this week, Apple announced the date for its next big product launch, scheduled for September 9 at 10:00 a.m. PT. The company’s invitations read, “It’s Glowtime.” Most industry commentators expect Apple to unveil the next generation of its flagship device – the iPhone 16 – at the event.

The image on the invites appears to be a stylized Apple logo combined with the icon for Siri, Apple’s digital assistant. The design has fueled speculation about what’s to come, and expectations are high that the update will include a much-needed upgrade to Siri. The company is also expected to announce details of Apple Intelligence, the company’s foray into generative AI.

This could be the catalyst for Apple’s next uptrend.

An Apple restore?

I’m not the only one who is optimistic that Apple sales could rebound sharply.

Daniel Loeb, CEO of hedge fund Third Point, recently added a sizable Apple stake to his portfolio. The billionaire amassed nearly 2 million Apple shares in the second quarter, worth around $443 million (at the time of this writing) and representing nearly 5% of his portfolio. Ignoring investor concerns that Apple would be “an AI loser,” Loeb opined that Apple Intelligence would generate “significant demand” from the company’s installed base and drive “a leap in Apple’s revenue and profit over the next few years.”

Veteran tech analyst Dan Ives of Wedbush is equally optimistic. Due to recent economic headwinds, the analyst estimates that “around 300 million iPhones worldwide have not been upgraded in over 4 years.” Ives goes even further, predicting that “Apple could sell over 240 million iPhones in fiscal 2025” as part of an “AI-driven upgrade cycle” driven by pent-up demand. With an average selling price of over $900, that would represent over $220 billion in revenue in iPhone sales alone, and an increase of around 10% over this year’s trajectory. Ives backs up his view with an Outperform (Buy) rating and a price target of $285, giving investors a potential upside of 25% from Monday’s closing price.

Should investors buy before September 9?

I generally advise investors not to make date-driven decisions, but rather to rely on the preponderance of evidence when deciding whether or not to buy a particular stock. Apple is no different.

Apple is the most popular smartphone in the world. According to Counterpoint Research, its devices will be among the top seven best-selling smartphones in 2023. Apple has more than 2 billion active devices worldwide, and it is estimated that about 1.4 billion of them are iPhones.

The potential for strong iPhone sales is clear, as are the accompanying sales of apps, services and add-on products. The economic headwinds of the past few years are beginning to subside, suggesting that consumers are likely more willing to upgrade to the latest iPhone. In addition, the new AI-driven features provide a compelling incentive for consumers to upgrade.

Apple currently trades at a slight premium of 34 times earnings, which is justified given its long-term growth track record. Moreover, the trifecta of new iPhone features, a Siri overhaul, and new AI-powered features could be just the catalyst Apple needs to kickstart its next big upgrade cycle and the next surge in its stock price.

All this suggests that Apple stock is a buy.