The price of Apple Inc. stock fell on Thursday as a result of fresh selling pressure that caused the biggest US technology stocks to lose hundreds of billions of dollars in market value.
After a rare analyst downgrade from Bank of America warning of declining customer demand for its well-liked gadgets, the iPhone maker dropped by as much as 6.1%, on track for its largest slump in two years. Apple’s market value was reduced by more than $140 billion as a result of the selloff.
On Thursday, investors had few places to hide as the Federal Reserve continued to talk tough about rising interest rates as part of the central bank’s fight against inflation. The Nasdaq 100 Stock Index had just two gainers as of 2:40 p.m. in New York, and it was on track to see its worst fall in two weeks. Alphabet Inc. and Amazon.com Inc. both experienced declines of over 4%, while Microsoft Corp. saw a decline of over 2%.
For the majority of this year, Apple has been regarded as a safe haven, beating other mega-caps and the broader IT gauge despite a sharp selloff sparked by economic fears. With a market value of around $2.3 trillion, the most valuable corporation in the world has now experienced a 20% decline in 2022, as opposed to a 32% decline for the Nasdaq 100.
BofA analysts led by Wamsi Mohan reduced the recommendation from buy to neutral since it is anticipated that consumer spending will slow down across all regions. Analysts predicted that as demand for Apple’s products and services slows, pressure from a higher dollar will only make matters worse.
BofA anticipates unfavorable estimate revisions and valuation issues in the near future, despite the fact that “Apple’s long-term prospects remain strong.”
Consumer discretionary spending has a significant impact on semiconductor demand, according to a separate note by BofA analyst Vivek Arya. Arya claimed that “risks to Apple suppliers are in a benign 1%-5% range and are therefore undesirable but not a catastrophe.”
According to a Bloomberg story, Apple is abandoning plans to ramp up production of its new iPhones this year after a predicted jump in demand did not occur.
According to bullish brokerages, the demand for the more expensive iPhone 14 Pro line, which the report corroborated analyst production projections for, is a good sign for the tech giant.
According to “strong demand in Apple’s new iPhone 14 Pro Max and Ultra watch,” Rosenblatt Securities analyst Barton Crockett, who held a neutral rating on the company since beginning coverage in April, increased his recommendation to buy.
We have reason to believe that customers in other nations share our enthusiasm, which has led us to adopt more optimistic short- and long-term projections, according to Crockett.
As of Thursday, Apple had a buy rating of 37, up from 28 at the end of 2020. Additionally, according to data from Bloomberg, it has 10 holds and 2 sell recommendations.