Apple Stock’s Safe-Haven Status at Risk as iPhone Headwinds Mount

tech.hindustantimes.com:

Apple Inc.'s status as a relative haven in this year's bear market is under threat amid growing concern that iPhone sales are weakening, portending further declines for technology stocks more broadly.

Over the weekend, the Cupertino, California-based company said Covid-related lockdowns in China would cause shipments of its newest premium handsets to be lower than previously expected. Bloomberg News also reported that due to weaker demand, Apple expects to produce at least 3 million fewer iPhone 14s this year than first anticipated.

The stock rose 0.6% on Tuesday, bringing its year-to-date decline to 21%. The Nasdaq 100 Index is down 32%. Other major technology and internet stocks -- including Microsoft Corp., Amazon. com Inc., and Alphabet Inc. -- are down between 32% and 46%.

Apple was the only megacap to rally in the wake of its results this quarter, and the report kept analysts from dramatically slashing earnings estimates, in contrast to widespread cuts elsewhere. Now the consensus for Apple is too optimistic, according to UBS Group AG. That represents a risk to the market's biggest company at a time when it already trades at a premium to the Nasdaq 100.

Brian Frank, chief investment officer of Frank Funds, called the lack of estimate cuts “a flashing red light” for investors.

“I don't see any reason why Apple estimates won't be cut at the same scale as tech overall, and because it trades with a multiple above 20, this seems like a massive risk,” he said. “Given its global exposure and the fact that consumers are facing a difficult environment because of inflation, I don't see anything to get excited about. I think there's a lot more downside risk for megacaps.”

Analysts expect earnings of $6.29 per share for