In 2023, Apple's stock underperformed its top tech peers, resulting in its longest revenue slide in 22 years.

• In 2023, Apple experienced its longest revenue decline in 22 years, with four consecutive quarters of decreasing sales.
• While some of the hardware problems were due to the economic climate for smartphones and computers, others were unique to Apple.
• Apple did not release new iPad models in 2023, and Apple Watches were removed from store shelves before Christmas.

In 2023, Apple's stock rallied, but its performance was outperformed by all of its mega-cap tech peers. The company experienced four consecutive quarters of declining revenue, which was the longest such slide for Apple since the dot-com bust of 2001.

In 2020, Apple faced challenges due to a poor economic climate for phone and computer sales, as smartphone sales over the summer were the slowest in over a decade.

Apple faced company-specific challenges in 2023, such as not releasing new iPad models, which has been the first time since its launch in 2010. This has resulted in less promotion and no official price cuts for older models, which may have negatively impacted sales.

According to Morgan Stanley analysts, all current model iPads were being shipped from Apple's website in a day earlier this month, indicating weak demand because with the most popular products, Apple doesn't have enough supply to fulfill orders that quickly.

In fiscal 2023, Apple's iPad revenue decreased by 3.4% to $28.3 billion. According to a recent estimate from Bank of America analyst Wamsi Mohan, iPad sales fell 15% on a unit basis. Apple does not disclose unit sales.

Apple stores in the U.S. removed new Apple Watch models days before Christmas due to an intellectual property dispute. Despite a late December appeal, the devices were returned to store shelves, resulting in an estimated loss of $135 million in sales per day for Apple during the brief ban, according to Morgan Stanley analysts.

Despite the release of new Mac computers, consumers exhibited a decrease in their willingness to purchase devices with minor upgrades. As a result, sales of Mac PCs and laptops decreased by approximately 27% to $10.2 billion in fiscal 2023. Additionally, according to Bank of America's estimate, unit sales fell by 11%.

Despite the Nasdaq's 44% gain, Apple shares still managed to jump 49% for the year as of Thursday's close. However, investors were better off betting on any of the other most-valuable tech companies, such as Amazon, Microsoft, Nvidia, and Tesla, which all more than tripled this year, with Amazon stock climbing almost 200%, Microsoft stock more than doubled, Nvidia stock rose 83%, and Tesla stock jumped 59%.

To regain revenue growth and maintain its $3 trillion market value, Apple must introduce new products and revive global demand for smartphones and laptops.

Early next year, Apple's first mixed-reality headset, the $3,499 Vision Pro, will be released and a big test will follow.

Erik Woodring, a Morgan Stanley analyst, wrote in a note this month that success with the Vision Pro is not primarily about achieving it by 2024, but rather about its long-term potential.

According to UBS analyst David Vogt, if Apple ships 400,000 headsets, Vision Pro revenue could be approximately $1.4 billion next year. He considered the amount to be relatively insignificant.

The Vision Pro, Apple's first new device since the Apple Watch, will be sold through Apple stores. This headset has the potential to drive foot traffic and excitement for Apple's existing products. Additionally, there is a possibility that it will become popular enough to demonstrate Apple's leadership in the future of computing.

Some problems are fixable

Apple hopes for a reduction of tension between the U.S. and China when viewing the situation from abroad.

In 2023, Apple made significant progress diversifying its centers of production away from mainland China and into countries like Vietnam and India. However, its moves to expand its supply chain seem to have triggered an impulse in the Chinese government to classify Apple as a foreign company. The White House has condemned reports that Chinese government agencies told their employees not to bring iPhones to work as "retaliation."

Despite the Chinese government's denial, analysts are concerned that Chinese demand for iPhones, particularly in the current quarter, may be declining. The iPhone continues to be Apple's top-selling hardware product, contributing roughly half of the company's total revenue.

During the upcoming holiday season, the debate over iPhone unit demand remains a crucial issue amidst broader economic challenges and worries about Huawei's potential market share resurgence in China.

Although it faced challenges, Apple continued to dominate with $383 billion in revenue and $97 billion in net income in fiscal 2023.

Despite a decline in the smartphone and PC markets, Apple experienced growth in market share in certain countries. In February, the company announced that it had 2 billion devices in use, a key metric for investors to gauge future sales from software and services.

Apple is planning to release new iPads next year, which could increase demand, as reported by Bloomberg. The company has submitted a software update for its watches to the U.S. government in an attempt to resolve the intellectual property dispute that temporarily halted sales. Despite Huawei's new devices having some features, iPhones still have a speed advantage due to import restrictions on chips and chip equipment.

In the December quarter, Apple's sales are expected to remain flat compared to the previous year, with declines in Mac, Wearables, and iPad sales, as stated by CFO Luca Maestri in November.

According to analyst estimates, mild growth is expected in the first half of the year, with acceleration in sales declines after that.

Bank of America analyst Simon Woo stated in a report this month that, although the downturn seems to have ended, mild growth is expected.

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