As technology stocks have slumped over the past week, traders have found a haven in the sector: Apple.
The stock rallied on Tuesday to close at a record high even as tech shares and the broader market sold off on worries about higher interest rates and the Omicron coronavirus variant. The iPhone maker was one of only seven stocks in the S&P 500 to rise, and it’s adding to those gains Wednesday in premarket trading, up 1.6%.
Investors have often prized Apple for its consistent sales growth and hefty cash balance, and the stock now is getting an added boost from the hype around autonomous vehicles and its planned foray into metaverse-related products.
“Wall Street is viewing it as a safety blanket tech name during this market turbulence,” said Dan Ives, an analyst at Wedbush who sees the stock gaining another 12% in the next year.
Traders’ embrace of Apple is a turnabout from just a month ago, when the stock was underperforming the S&P 500 and the company warned that a shortage of semiconductors would hamper product sales for the holidays.
Morgan Stanley analysts have been talking up Apple’s electric car programme after a report this month that the company is accelerating the effort. Even if the firm wins just a 4% share of the global mobility market, its revenue base could double, according to the bank.
‘Safe as it gets’
Similarly, mass market adoption of either augmented reality or virtual reality — a gateway to the metaverse — will only occur “when Apple enters the race”, Morgan Stanley technology analysts Katy Huberty and Erik Woodring wrote in a report.
“It’s as safe as it gets in the tech space and yet there’s still fantastic opportunities in the coming years,” said Craig Erlam, senior market analyst at Oanda. “So there’s every reason for investors to feel safe with a stock like that, even in turbulent times.”
Since the report on foray into cars, Apple shares have risen almost 8%, and the stock is now outperforming the S&P 500 for the year.
And those worries about holiday sales may turn out to have been overdone. “Based on retail checks and supply chain, it appears iPhone 13 demand is robust coming out of Black Friday,” Ives said. — Thyagaraju Adinarayan and Jeran Wittenstein, (c) Bloomberg LP