So far in 2022, Apple stock has done better than the S&P 500, Nasdaq, growth stocks and tech stocks. Is the outperformance justified?
The US stock market (SPY) continues to bounce around on the back of macroeconomic and geopolitical turbulence. If high inflation, choked supply chains and rising interest rates were not enough, the Russia-Ukraine conflict escalated fast and has no end in sight.
Meanwhile, Apple stock (AAPL) has been faring better. Even though it is considered a growth and higher-beta stock, investors seem to be finding safety in this stock.
AAPL: an outperformer
The chart below is telling. So far in 2022, AAPL has dipped a modest 8%, as of the writing of this sentence. This is better than the S&P 500’s and the Nasdaq’s (QQQ) 10% and 14% declines during the same period, respectively.
But Apple’s outperformance can not be easily explained by a sector and factor analysis alone. For example, growth stocks (VUG) have shed 15% of their market value in 2022. Meanwhile, tech stock (XLK) prices have sunk 13%. Apple stock has outperformed them all.
Why so resilient?
In my view, Apple’s resilience in 2022 is a bit counterintuitive, at first glance. Before the start of the war in Eastern Europe, the market’s biggest concern was high inflation leading to rising interest rates. This setup has been most damaging to growth and richly-valued stocks.
Because AAPL trades at the richest 2025 earnings multiple of all FAAMG names, one could have assumed that shares of the Cupertino company would have corrected sharply in Q1. So far, this has not been the case at all.
The most likely explanation is Apple’s strong business fundamentals that are unlikely to be hurt by macroeconomic and geopolitical issues — that is, unless something highly disruptive to either happens, including sharp economic growth deceleration.
Also, Apple’s business is not very dependent on Russia.I explained recently that less than 1% of the company’s revenues are estimated to come from Vladimir Putin’s country. Meanwhile, the Cupertino company does not have any Russia-based supplier.
