Today, the Dow surged over 100 points while the Nasdaq fell in the red. Why is that? Well, the Nasdaq’s underperformance is largely thanks to a 5% pullback in Apple Inc. (AAPL), which makes up a whopping 12% of the Nasdaq Composite.
The fuss stems from speculation that the iPad could lose ground to the growing number of Android-based tablets on the market. According to IDC, Apple’s market share is expected to decline from 56.3% to 53.8% in 2012, while Android tablets are expected to capture 42.7% of the market (up from 39.8%). By 2016, iPad market share is forecast to drop below 50%.
But what many sellers are forgetting is that even if Apple gets a slightly smaller slice of the tablet pie, the pie itself is growing by leaps and bounds. Analysts are calling for 122.3 million shipments in 2012 and 172.4 million in 2013—that represents a 41% jump! So even with this extra competition Apple stands to profit handsomely from the tablet boom.
And whenever we talk about Apple’s growth prospects, we can’t forget the iPhone. This quarter, analysts expect that 224.5 million smartphones will sell around the globe—nearly a 40% increase over last year. This is, of course, very good news for Apple, and here’s why:
- Apple now commands 48.1% of the U.S. smartphone market thanks to the iPhone 5, overtaking the Android’s 46.7% share.
- The iPhone 5 also pushed Apple ahead of LG among U.S. phone makers—it is now second to only Samsung.
- The iPhone 5 drives 13% of all iPhone web traffic—an accomplishment considering that the smart phone has only been out for two months.
- Apple plans to launch the iPhone 5 in 50 countries by the end of the month, including Brazil and Russia. Currently, the iPhone 5 is sold in 47 countries.
So now that the company’s supply problems have been resolved, analysts expect 46 million iPhones to sell this quarter—a huge jump from the 26.9 million iPhones sold last quarter. Fueled by iPhone 5 sales, total sales are expected to jump 17.8% this quarter. And that number should only increase in the coming months.
To sum up, Apple Inc. is still a great buy, and I expect that it won’t be long before those who sold off today rethink their decision.