Billionaires are shifting their portfolios. Selling off stocks like Apple (NASDAQ:AAPL) and picking up growth-oriented opportunities such as Shopify (TSX:SHOP). This strategic reallocation reflects a broader trend in investing — one that seeks to balance stability with the potential for outsized returns in a rapidly changing market. Today, let’s take a look at what’s going on.
Apple stock
Apple stock, for years a cornerstone of tech portfolios, is showing signs of maturing. The company’s recent earnings reveal slowing growth, with quarterly revenue increasing by just 6.1% year over year. While Apple’s profitability remains strong, with a 23.97% profit margin, its days of explosive expansion appear to be behind it. For investors like Warren Buffett, Apple stock is still a “great company.” But trimming the position frees up capital for higher-growth opportunities elsewhere.
One reason investors are reconsidering their Apple holdings is its valuation. With a forward price-to-earnings (P/E) ratio of 30.67, Apple stock is expensive for a company with slowing revenue and a modest dividend yield of 0.44%. Although it’s a safe and reliable holding, it doesn’t offer the kind of dynamic potential that attracts risk-taking billionaires looking for the next big thing.
Shopify stock
Enter Shopify stock, the Canadian e-commerce giant that has captured the imagination of growth investors. Shopify stock recently reported a blockbuster third quarter in 2024, with a 26.1% year-over-year revenue increase to $2.16 billion, significantly beating expectations. Its earnings per share (EPS) also soared, beating consensus estimates by 33.33%. Such results highlight Shopify’s ability to deliver consistent surprises to the upside, a key trait billionaires value in growth stocks.
The future looks even brighter for Shopify stock. The company’s fourth-quarter revenue is expected to grow by as much as 25%, with full-year earnings projected to increase by a staggering 51.35%. Unlike Apple stock, which has a more established and predictable growth trajectory, Shopify stock is in the early stages of capitalizing on the global shift toward e-commerce.
The choice is pretty clear
Investor sentiment around Shopify stock is electric. Following its third-quarter (Q3) earnings announcement, Shopify’s stock surged 21% on November 12, with an additional 5.7% gain the next day. Analysts are raising their price targets in response. This level of excitement reflects the market’s confidence in Shopify’s ability to sustain its growth and navigate the competitive landscape.
Shopify’s business model is another point of attraction. Unlike Apple stock, which relies heavily on hardware sales and faces increasing competition and regulatory scrutiny, Shopify stock thrives by enabling commerce through software and services. Its growth is fueled by the expanding e-commerce ecosystem, which continues to penetrate global markets, including Europe and emerging economies.
While Shopify’s forward P/E of 75.76 may seem steep, it’s justified by its rapid revenue growth and expanding market share. Billionaires are willing to pay a premium for a company with Shopify’s potential because it aligns with their goal of long-term value creation. In contrast, Apple stock, with its slower growth and high valuation, offers less appeal for those seeking exponential returns.
Bottom line
This shift doesn’t mean billionaires are abandoning Apple stock altogether. Many still hold significant stakes in the company as a source of stability and income. However, the decision to add Shopify stock reflects their belief in its ability to generate outsized returns in a digital-first world. Shopify’s innovative partnerships, robust revenue growth, and strong market position make it a compelling alternative to more mature investments.
In the end, billionaires are selling Apple stock not because it’s a bad investment. But because they see Shopify as an even better one. The Canadian e-commerce leader offers a rare combination of growth, innovation, and market leadership, making it a top pick for those looking to stay ahead in the ever-evolving world of investing.
