2024 is shaping up to be a tumultuous year for Apple (NASDAQ:AAPL). The tech behemoth and smartphone market leaders had been forced to contend with stock price downgrades from banks following lower consumer demand, and now face a landmark lawsuit amid accusations of building an industry monopoly.
Apple has firmly denied the allegations, but this has failed to stop comparisons being drawn between the firm and Microsoft’s (NASDAQ:MSFT) behavior in the 1990s, which resulted in a lawsuit and requirements that the company modify its more monopolistic practices.
On Wall Street, there’s already been some damage done to Apple’s stock price. The first quarter of 2024 saw AAPL tumble more than 8%, and the prospect of a costly reprimand could bring a fundamental change in the way that Apple operates which opens the door to stronger smartphone market competition.
While the outcome of the lawsuit could hit Apple’s pockets, fundamental shifts in business operations could carry major ramifications for its market dominance. Should Apple be forced to make products more interoperable with other brands and provide more open services, consumers may be free to mix and match brands on an unprecedented scale. This may open the door to the following key smartphone stocks to grow into Apple’s market share:
Alphabet (GOOGL,GOOG)
Unlike Apple, Google parent company Alphabet (NASDAQ:GOOGL,NASDAQ:GOOG) has gotten off to a strong start in 2024, posting growth of around 10% in the first quarter.
Back in Q4 2023, Alphabet reported its fastest quarter for revenue growth since early 2022, with sales accelerating 13% from $76.05 billion year-over-year. Despite this impressive expectation-beating performance, share prices briefly slipped due to weaker Google ad revenue.
Recently, Alphabet’s stock rallied after reports suggested Google may be readying to put its artificial intelligence (AI) search services behind a paywall. Crucially, AI has been an area where Google has been quick to adopt while Apple’s interest in the emerging technology remained more hesitant.
Not only could this offer a crucial fresh revenue stream for Alphabet, but it could also see AI services become a key feature of Google’s next generation of Pixel smartphones, which are readying for launch later this year.
With Android as the closest rival of Apple’s iOS smartphone operating system, any challenges to the latter’s attempted smartphone industry monopoly will see Google’s market position improve. Additionally, should Apple be ordered to create cross-functionality throughout its range of smartphone products, we could see a surge in demand for Android products among iPhone users.
Samsung Electronics (SSNLF)
Another stock that outperformed Apple in Q1 2024 and could benefit from a de-monopolization of the smartphone market is South Korean firm Samsung Electronics (OTCMKTS:SSNLF).
While Samsung experienced slow growth throughout the opening weeks of the year, the recent news that the tech giant could be in line to become a supplier to semiconductor leaders Nvidia (NASDAQ:NVDA) saw a rapid 5% jump in stock value. Currently, Nvidia is testing Samsung’s new range of high-bandwidth memory (HBM) chips in what may be a lucrative partnership.
Samsung’s advantageous position in the global chip market recovery has seen the firm’s stock price grow of late, and many securities firms are forecasting an operating profit of over 5 trillion won ($3.7 billion) in Q1 2024, up significantly from the 640 billion won ($476 million) recorded one year prior.
If these figures are achieved, they would represent Samsung’s largest operating profit since the third quarter of 2022.
Samsung’s position in the smartphone market may be another cause for investor optimism in the wake of Apple’s ongoing difficulties. The firm recently revealed the Galaxy ring in January at Mobile World Congress in Barcelona. With the Galaxy ring, Samsung is set to enter the smart wearables market while innovating beyond traditional smartphones.
Although it can be difficult to monitor the long-term consumer appetite for smart wearables, the fallout of Apple’s lawsuit could see the Galaxy ring win a new audience among iPhone users.
Nokia (NOK)
Yes, Nokia ADR (NYSE:NOK) may be trading at just 5% of its market peak during the Finnish firm’s heyday at the turn of the century, but there’s still plenty for investors to be optimistic about for a stock that’s continued to defy expectations in recent years.
In Q1 2024, NOKIA grew a healthy 4%, and the stock has recently earned the attention of meme investors who have sought to buy into Nokia through a sense of nostalgia and high retail investor sentiment.
Despite the company’s enduring popularity, times have been tough of late for Nokia. Q4 2023 sales of 5.7 billion euros represent a 23% year-over-year decline, while operating profit dropped 27% year-on-year to 846 million euros.
Nokia’s recent hardships have prompted a 600 million euro share buyback scheme in early 2024, and telecommunications operator cutbacks and a slowdown among investments in India have caused the company to forecast more difficulty over the year ahead.
These forecasts make Nokia a riskier opportunity for investors, but it’s important to note that the firm’s slowing sales have already been factored into the market, and it’s also worth highlighting that Nokia is continuing to win new admirers amid growing ‘dumb’ phone market sentiment.
While it’s been hard for Nokia to compete with Android and iOS market leaders, the firm’s power of nostalgia is seeing more users opt for the app-free offerings of Nokia’s streamlined handsets.
While the lure of Nokia’s meme stock status and ‘dumb’ phone popularity could help the company to outperform its expectations in 2024, it may depend on the firm’s relationship with HMD, which has long-manufactured phones for Nokia but may soon begin using its own branding.
Either way, Nokia remains a stock that’s worth tracking as an unpredictable 2024 could deliver plenty of market twists and turns.
On the date of publication, Dmytro Spilka did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
