Apple vs Samsung Stock: Battle of the Smartphone Giants

Apple vs Samsung Stock: There is no question that smartphones have transformed lifestyles at the most fundamental level. These pocket-sized devices make the power of the internet portable, and people of all ages rely on smartphones for everything from communication to monitoring home security.

Researchers who have studied smartphone usage offer the following eye-opening facts:

• The average person spends approximately three hours per day on their phone.
• When combined with tablets, average daily usage goes up to four and a half hours.
• One and a quarter hours of that time involves social media use.
• Users tap, click, or swipe on their phones more than 2,500 times per day.
• More than half of individuals between the ages of 18 and 29 check their phones a few times each hour.
• More than a fifth of that group check their phones every few minutes.

These figures aren’t exclusive to the United States. In fact, the US isn’t even number one. Smartphone users in Brazil and China spend the most time with their devices.

For investors, the question is this: is there still money to be made from buying stock in smartphone design and manufacturing companies? If so, which company is most likely to produce continued growth and strong profits?

Pros and Cons of Investing in Smartphones

Leading smartphone companies like Apple and Samsung have had years of solid growth and seemingly limitless profits. Rapid advances in technology made older phones like Nokia’s virtually obsolete in just a few years, nearly guaranteeing repeat business from customers anxious for the latest and greatest software and features.

Complementary services like online banking, smart home platforms, gaming, and video streaming required constant upgrades in speed and storage, and consumers were happy to trade up every year or two. Meanwhile, those who hadn’t yet given up their old flip phones were gradually persuaded to adopt newer technology, and the industry’s biggest players made dramatic inroads into even the most underserved global markets. For example, Ethiopia – often ranked as the poorest country in the world – has surprisingly high smartphone usage.

But sales of even the most popular technology eventually plateaus, and smartphones are no exception.

In 2018, sales were far below forecast, and the truth was clear: there are plenty of excellent smartphones on the market, and today, everyone who wants one has already purchased one. New models aren’t different enough to justify the hefty price tag an upgrade would require, and in some cases, upgrades no longer offer features that users relied on in older versions.

Of course, it isn’t all bad news. Innovative features could be a game-changer, and consumers may upgrade at high volume when 5G service becomes available. Investors interested in this industry must consider which company is most likely to convince smartphone users to trade in old devices for the newest offering.

Is Apple Stock a Buy?

After a disappointing fourth quarter, Apple stock lost some of its luster, but the smartphone leader isn’t going down without a fight.

While global smartphone sales are expected to decline by 1.9 percent from 2018 to 2019 – a third consecutive year of lower sales – Apple is focused on making the most of other increasingly popular technologies.

One of the most promising opportunities that Apple [NYSE: AAPL] is exploring is wearables – a market that is expanding rapidly. North American wearable sales reached $2 billion for second quarter of 2019, and total shipments increased 38 percent year over year. An amazing 7.7 million units were sold.

Apple’s smartwatch hasn’t made a significant impact in its revenues yet, but all signs point to future success.

Apple Watch sales grew 32 percent year over year, and 2.9 million were shipped to consumers. This is a whopping 37.9 percent of the total market.

Compare these figures to FitBit, a company that has long dominated the wearable space. FitBit shipped just 1.9 million devices, coming in second with a market share of 24.1 percent.

The takeaway for investors is this: Apple [NYSE: AAPL] has proven again and again that it can flex and adapt to consumer expectations, and the company has long been a leader in innovation.

While no one can be sure what the next must-have technology will be, chances are Apple will have a hand in developing and releasing it. For those willing to take a leap of faith, Apple is a promising choice for continued growth.

Should You Invest in Samsung Stock?

Headquartered in South Korea, Samsung is a massive global electronics brand.

Despite some setbacks with its line of Galaxy smartphones, the company has managed to corner a respectable share of the mobile device market. However, like Apple, Samsung’s smartphone sales hit a lull in recent years due to market saturation.

Though smartphone sales aren’t hitting the mark, Samsung has plenty of other profitable businesses to fall back on. The company is well-diversified, and there is a commitment to investing in research and development to create ever-more-innovative technology.

Some analysts question how much Samsung can realistically expect to grow in coming years, as it has already connected with most consumers in the markets it currently serves.

The real question for investors is whether Samsung will deliver the next major technological innovation. If it does, the stock price could explode. Otherwise, the company may continue to come in behind its biggest smartphone rival, Apple [NYSE: AAPL].

Apple vs. Samsung Stock: The Bottom Line

Investors choosing between Apple [NYSE: AAPL] and Samsung tend to land squarely with Apple [NYSE: AAPL].

First, trading Samsung is a bit complicated, because it is a South Korean company. Second, and more importantly, Apple is seeing impressive growth outside of its smartphone unit.

Samsung isn’t having quite as much success. This indicates that Apple is more likely to make a dramatic comeback that brings profits in for investors.

 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.