Apple’s Wall Street woes continued Tuesday as shares of the iPhone maker headed toward their lowest level in more than four months as investor anxiety mounts about Apple’s artificial intelligence efforts and its slumping China business.
Apple stock fell more than 2% shortly after market open to as low as $170.20, registering its lowest price since Nov. 1, and heading toward its fifth consecutive losing session.
The primary catalyst for Tuesday’s losses was a report from Hong Kong-based Counterpoint Research indicating iPhone sales fell 24% year-over-year over the first six weeks of 2024, an unwelcome finding considering China accounts for more than 15% of Apple’s revenues and sales in the region already fell 13% in Apple’s most recent quarter, on an annual basis.
The reported slump in iPhone sales in China, which builds on the slow iPhone growth narrative weighing on Apple earlier this year, coincides with mounting analyst concerns about Apple falling behind its big tech peers in AI.
Apple stock has returned -11% year-to-date and 14% over the last 12 months, which is far worse than the S&P 500 (up 8% year-to-date, 29% over the past year).
Apple shares “are at a crossroads,” declared Rosenblatt analyst Barton Crockett in a Tuesday note to clients, hypothesizing Apple may have lost its “luster” on Wall Street following its sunsetting of its electric vehicle project and the “uninspiring” launch of its Vision Pro mixed reality headset.
BIG NUMBER
$368 billion. That’s how much market capitalization Apple has lost in 2024, bringing its valuation to $2.6 trillion and causing Apple to lose its mantle as the world’s most valuable company to Microsoft. Microsoft and Nvidia, the world’s third-largest firm, have gained about $240 billion and $920 billion in market value year-to-date, respectively.
Comments
Recent Market Movements & News:Executive Departure:
Paul Meade, Apple’s hardware chief for the Vision Pro and smart glasses, left the company to join OpenAI, marking a notable talent loss in the AI and hardware space.Price Increases: Apple raised retail prices for its MacBooks and iPads to offset soaring memory and storage component costs driven by the AI datacenter buildout.
Supply Chain Hurdles:
The company is seeking U.S. government approval to purchase memory chips from a blacklisted Chinese firm to mitigate financial and supply pressures.
Stock Performance:
Shares have experienced recent short-term pullbacks amid tech sell-offs but maintain a solid valuation and strong historical performance.
Macroeconomics and Microeconomics:
Earlier this year, Mono Technologies assembled and shipped nearly 1,000 units of its flagship product, a $600 router development kit. Co-founder Tomaž Zaman, who started Mono in 2024, found early traction with networking aficionados, who use the product to speed their internet connections.
Then came the memory crunch, which has driven up the cost to produce practically every electronic device on the planet. Now, Zaman isn’t sure what to do, especially for the 1,300 prospective customers who put down a $100 deposit for his next production run.
Mono’s cost for 8 gigabytes of a type of DRAM from Micron
shot up from $35 when he was first developing the product to $300 today. At his three-person company, Zaman said he hasn’t decided if he’ll go ahead with a second batch and increase the price by at least one-third, or introduce a new model with 75% less memory.
“Even a router of our class, it’s a poor value if you make it at $900, $1,000,” Zaman told CNBC in an interview. “But we have to, or we trim it down to the bare minimums.”
Zaman’s experience is becoming common across the consumer electronics market, from iconic devices like iPads and Xbox consoles to niche products that are barely past the testing phase. Costs are soaring due to a global supply crunch caused by the artificial intelligence boom, which has led chipmakers like Nvidia
to suck up ever-increasing amounts of memory for their processors and advanced systems.
Price Hikes Announcements:
Both Apple and Microsoft, announced price hikes this week, have a hefty cash cushion, supply chain leverage and customers numbering in the millions or billions, a much wider swath of businesses face potentially dire straits. Most consumer electronics companies have little margin to spare and can’t confidently raise prices in an economy already grappling with inflationary pressures.
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