Apple, once a stalwart of Big Tech, now faces unexpected challenges as it emerges as the weakest performer among the prominent “Magnificent Seven,” excluding Tesla, year to date.
With shares declining by 11.6%, Apple lags behind Microsoft, Netflix, Nvidia, and Meta Platforms, which have all seen gains.
The latest blow to Apple’s stock occurred on Tuesday, dropping over 2% following a report by Counterpoint Research indicating a 24% decline in iPhone sales in China during the first six weeks of 2024 compared to the previous year.
JPMorgan analyst Samik Chatterjee noted the significant decline, hinting at an accelerated pace of downturns compared to the prior quarter, despite maintaining an overweight rating on the stock, cautioning on limited visibility into recovery timing.
Apple’s recent commentary, particularly regarding weaker iPhone sales, has been concerning. CFO Luca Maestri’s disclosure that first-quarter smartphone sales would mirror the year-earlier period underscores this trend. Although the fiscal first quarter saw the company’s first year-over-year revenue increase in four quarters, it was lackluster overall.
Goldman Sachs removed Apple from its conviction buy list, citing market focus on slower product revenue growth, while acknowledging the resilience of the Apple ecosystem and associated revenue durability and visibility.
Despite concerns, Melius Research’s Ben Reitzes urges investors to remain composed, highlighting Apple’s vast active installed base and the unlikelihood of users switching to Android. He anticipates a potential “comeback,” emphasizing the role of artificial intelligence and an iPhone “supercycle.”
Looking ahead, analysts anticipate Apple’s AI strategy launch in June as a pivotal moment, likening it in significance to the iPhone’s debut.
Overall sentiment on Apple remains positive, with consensus ratings and average analyst price targets suggesting an upside of over 18%.
Let’s take a look at the charts to see what might need to happen for the current downtrend to reverse back into an uptrend.
Click here to watch this video on YouTube or click the image below:
