Apple and other Tech Safe games turn into shooting stars
Apple (AAPL) – Get the Apple Inc. who?
The maker of the iPhone, a safe bet for many experts, seems to be living a nightmare like many technology companies. The Cupertino, Calif.-based company must feel that this horror dream is endless.
For now, the consequences are immense. The stock was down 20% to $142.77 at the last check since November, despite earnings proving the strong fundamentals of a company with near-unrivaled operating margins. In the last quarter, Apple recorded revenue of $157 billion, up 5%, a sign that demand for its products – mac, Apple Watch, iPhone – and services – Apple Store, Apple TV and Health+ – stay strong.
Apple last month reported net income of more than $59.6 billion for the three months ending March, as revenue rose 8.6% from a year ago to 97.28 billion, comfortably beating analyst estimates of $93.9 billion. Apple said iPhone revenue rose 5.5% from a year ago to $50.57 billion.
Apple has lost a prestigious crown
Investors ignored all of these positive signals to focus on all of the negatives. So it’s no surprise that Apple recently lost the symbolic title of the world’s most valuable company. The company’s market capitalization was $2.31 trillion, compared to oil giant Saudi Aramco’s $2.316 trillion, as of May 22.
The company warned that supply chain disruptions, particularly in China, as well as the war in Ukraine, would reduce current quarter revenue by $4 billion to $8 billion.
Like the entire tech sector, the Californian juggernaut is suffering from investor fears about the economy. After the Federal Reserve began raising interest rates in an attempt to curb inflation, many economists are anticipating a recession.
“I’m glad to see @paulkrugman join the view that the US economy is currently overheating and needs moderation,” said former Treasury Secretary Larry Summers, now a Harvard professor. “If the risks of overheating had been recognized more quickly, we would be in a less serious situation today.”
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Financial turmoil is also building in Europe, according to Citigroup CEO Jane Fraser.
“Europe is right in the middle of the supply chain storms, the energy crisis, and obviously just the proximity of some of the atrocities that are happening in Ukraine,” she told Geoff Cutmore from CNBC at the World Economic Forum in Davos.
Investors fear tech groups will be hit first once households decide to cut less urgent spending. The eight tech companies included in the top 10 largest valuations in the world have been struggling since the start of the year.
Microsoft shares have lost 22.4% since January to $259.70, while the price of Alphabet (GOOGL) – Get the Class A report from Alphabet Inc. shares fell 23.2% to $2,261.63 during the period. Amazon (AMZN) – Get the report from Amazon.com, Inc. for its part fell 37% to $2,108.92. The action of the e-commerce giant has fallen by more than 1,200 dollars in less than six months.
Microsoft ($1.95 trillion), Alphabet ($1.46 trillion) and Amazon ($1.09 trillion) remain above the billion mark in terms of market value.
Tesla electric vehicle manufacturer (TSLA) – Get the Tesla Inc report is trading around $665.70, down 37% since January, and is a far cry from the trillion-dollar market cap reached a few months ago. Elon Musk’s company has a market value of $699.20 billion.
The trillion dollar market capitalization is no longer in sight for Meta either (Facebook) – Get the Class A report from Meta Platforms Inc. (Facebook) and Nvidia (NVDA) – Get the NVIDIA Corporation report.
The social media giant has posted a price loss of 43.3% since January to $193.88 for a market capitalization of $531.06 billion.
Nvidia shares are down 43.4% since January at $166.50 for a market capitalization of $421.09 billion.