The consumer tech industry is flourishing with the increasing demand for digital technologies like AI and IoT among consumers.

Given the industry’s backdrop, investors could consider fundamentally sound consumer tech stocks Apple Inc. (AAPL), Dolby Laboratories, Inc. (DLB), and Knowles Corporation (KN) for potential gains.

The U.S. economy grew strongly during the third quarter, with rising consumer spending marking its fastest pace in over one and a half years. This was supported by sharply slowing inflation levels and robust business investment in equipment. The gross domestic product increased at a rate of 2.8% in the third quarter.

The surging consumer spending is an indicator of rising disposable income and changing consumer behavior as more and more consumers lean towards efficiency, comfort, security, and convenience of their homes through technologies.

Further, with the rapidly developing smarter and more interconnected technologies, the possibilities in smart home development are becoming endless. These trends are rapidly fueling the possibilities of the consumer technology market. Consumers increasingly spend on smart home devices to enhance their home security, convenience, and comfort.

Technologies like Artificial Intelligence (AI) and the Internet of Things (IoT) also mark their contribution to the evolving market dynamics. With this, the global smart home market is projected to grow $633.20 billion by 2032, exhibiting a CAGR of 22.9%. Also, the U.S. smart home market is predicted to grow significantly to a total of $105.25 billion by 2032.

Amid rising spending on consumer tech devices like smart entertainment devices, smart home monitoring and security solutions, smart door locks, and home appliances and complementing technologies like communication technologies, Wi-Fi, Bluetooth, and the 5G network, consumer tech stocks are positioned to prosper.

With these favorable trends in mind, let’s delve into the fundamentals of the three top consumer tech stock choices mentioned above.

Apple Inc. (AAPL)

AAPL designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories worldwide. The company offers iPhone, Mac, iPad, wearables, and home accessories, including AirPods, Apple TV, Apple Watch, Beats products, and HomePod.

On October 30, AAPL launched the new MacBook Pro®, powered by the M4 family of chips — M4, M4 Pro, and M4 Max, which delivers even faster performance and enhanced capabilities. The new MacBook Pro is built for Apple Intelligence™, the personal intelligence system to transform how users work, communicate, and express themselves while protecting their privacy.

Also, on October 29, the company unveiled the all-new Mac mini®, also powered by the M4 and new M4 Pro chips. It is redesigned around Apple silicon to offer incredible performance in an even smaller form of just 5 by 5 inches. With M4, Mac mini delivers up to 1.8x faster CPU performance and 2.2x faster GPU performance over the M1 model.

AAPL’s total net sales increased 6.1% from the year-ago value to $94.93 billion during the fourth quarter that ended September 28, 2024. The company’s operating income increased 9.7% year-over-year to $29.59 billion. Also, the company’s net income and EPS totaled $14.74 billion and $0.97 for the quarter, respectively.

Analysts expect AAPL’s revenue for the first quarter (ending December 2024) to grow 4% year-over-year to $124.41 billion. The company’s EPS is expected to increase 7.9% year-over-year to $2.35 for the same period. Moreover, the company surpassed the consensus revenue and EPS estimates in all of the trailing four quarters.

Shares of AAPL have surged 22.2% over the past six months and 23.9% over the past year to close the last trading session at $222.01.

AAPL’s robust prospects are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

AAPL has an A grade for Quality. Within the Technology – Hardware industry, AAPL is ranked #24 out of 41 stocks.

Click here to access AAPL’s other ratings for Momentum, Value, Growth, Sentiment, and Stability.

Dolby Laboratories, Inc. (DLB)

DLB creates audio and imaging technologies that transform entertainment at the cinema, DTV transmissions and devices, mobile devices, OTT video and music services, home entertainment devices, and automobiles. It develops and licenses its audio technologies, such as AAC & HE-AAC, AVC, Dolby AC-4, and Dolby Atmos technology.

On September 13, DLB launched a new comprehensive range of cloud video products and solutions supporting real-time interactive streaming. The announcement came closely after DLB’s recent acquisition of THEO Technologies, a leading provider of high-quality video streaming tools.

FanDuel, ITV, Las Vegas Sands, NASCAR, NFL, and others are leveraging the latest solutions to increase their engagement while improving their audiences’ streaming and iGaming experiences.

On June 6, DLB entered into a definitive agreement to acquire GE Licensing, which owns, maintains, and licenses an extensive portfolio of IP primarily targeting the consumer digital media and electronics sectors. The strategic acquisition will strengthen DLB’s licensing businesses and create opportunities for future growth.

During the third quarter, which ended on June 28, 2024, DLB reported a total revenue of $288.82 million, and its gross profit for the period was $253.15 million. The company’s operating income of $36.78 million indicates growth of 130.8% from the prior year’s quarter.

In addition, net income attributable to DLB came in at $38.44 million and $0.40 per share, up 134.4% and 135.3% from the previous year, respectively.

Analysts expect DLB’s revenue for the fourth quarter (ended September 2024) to increase 6% year-over-year to $307.94 million, while its EPS for the same period is expected to grow 7.2% year-over-year to $0.70. Also, DLB has topped the consensus revenue and EPS estimates in each of the trailing four quarters.

DLB’s shares have plunged 3.4% over the past month to close the last trading session at $73.39.

DLB’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

The stock has an A grade for Quality and a B grade for Sentiment. Within the Technology – Electronics industry, DLB is ranked #3 among the 42 stocks.

In addition to the POWR Ratings we’ve stated above, we also have DLB ratings for Stability, Momentum, Value, and Growth. Get all DLB ratings here.

Knowles Corporation (KN)

KN offers capacitors, Radio Frequency (RF) filtering products, balanced armature speakers, micro-acoustic microphones, and audio solutions internationally. It operates in Precision Devices; Medtech & Specialty Audio; and Consumer MEMS Microphones segments.

On October 31, KN partnered with Mimi Hearing Technologies, the provider of the number one hearing test app on the market, to create innovative solutions for audio devices, such as true wireless stereo (TWS) earbuds, in-ear monitors (IEMs), headphones, and more.

The Breggz™ ZOHN-1 in-ear computer is the first hearable device to market that incorporated a cutting-edge combination of KN and Mimi technologies, delivering a breakthrough in premium, personalized, and immersive listening.

For the third quarter that ended September 30, 2024, KN’s revenues increased 31.8% year-over-year to $142.50 million. Its non-GAAP gross profit increased 27.3% from the year-ago value to $64.80 million. Also, the company’s non-GAAP net earnings totaled $24.20 million or $0.26 per share, up 28.7% and 30% from the prior year’s quarter, respectively.

Furthermore, the company’s adjusted EBITDA increased 20.3% from the prior-year quarter to $35 million.

According to the company’s fourth quarter 2024 outlook, KN projects revenues from continuing operations between $141 and $151 million. It also expects non-GAAP EPS from continuing operations of $0.26 – $0.30.

Street expects KN’s EPS for the fourth quarter (ending December 2024) to increase 0.9% year-over-year to $0.28. For the fiscal year 2024, the company’s EPS is expected to grow 11.7% year-over-year to $0.98. Also, the company topped the consensus EPS and revenue estimates in three of the trailing four quarters.

Shares of KN have surged 4.7% over the past six months and 10.4% over the past year to close the last trading session at $17.49.

KN’s POWR Ratings reflect its sound fundamentals. The stock is ranked #25 out of 42 stocks within the Technology – Electronics industry.

To access all the POWR Ratings of KN, click here.

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AAPL shares were trading at $223.45 per share on Tuesday afternoon, up $1.44 (+0.65%). Year-to-date, AAPL has gained 16.50%, versus a 22.46% rise in the benchmark S&P 500 index during the same period.

About the Author: Rjkumari Saxena

Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions. More...

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