Apple’s stock price has seen a steep decline over the past week, dragging down the company’s market value by over $370 billion amid a broader sell-off in technology stocks to start 2024.
Massive Value Erosion Places Apple’s Crown at Risk
The iPhone maker has been the world’s most valuable public company since surpassing Saudi Aramco in late 2021. However, Apple has now relinquished the top spot back to the oil giant after having its market capitalization slashed to under $2 trillion.
Apple’s shares have plunged nearly 10% since the beginning of the year. The stock hit a 20-month low on January 4th after analysts at Bank of America warned major technology and internet stocks could fall further as investors price in the risk of recession this year.
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The collapse in Apple’s equity value means it has been dethroned by Saudi Aramco as the world’s most valuable company once again after a 14-month run. Apple now has a market cap of around $1.87 trillion, compared to Aramco’s $2.4 trillion valuation.
Saudi Aramco’s corporate headquarters in Dhahran, Saudi Arabia. The oil giant is back on top as the planet’s most valuable public firm.
Growth Stock Pain Spreads Through “Magnificent Seven”
Apple headlines a group of 7 technology stalwarts dubbed the “Magnificent Seven” that fueled the bull market over the past decade. The other members are Microsoft, Amazon, Alphabet (Google), Meta (Facebook), Tesla, and Nvidia.
This cohort led the stock market higher in 2023 amid optimism over the resilience of tech earnings in a murky economic environment. However, the tide has swiftly turned against Big Tech to ring in 2024.
The Magnificent Seven have collectively shed over $700 billion in market capitalization in the first 4 trading days this year as investors revert to a risk-off stance. Thenasdaq index, which the group predominantly trades on, has plunged 5.5% in January – its worst start since 2016.
Behind the pessimism is the expectation that the Federal Reserve could keep hiking interest rates for longer to tame inflation. This would pressure equity valuations, particularly for companies trading at higher price-to-earnings ratios.
What’s Next for Apple After the Dismal Start?
The immediate outlook for Apple is likely to remain challenging as analysts predicting the slowing economy will catch up with the tech sector. Consumers may pull back spending on discretionary items like iPhones and services such as Apple TV+ this year if the U.S. enters recession.
Apple is set to report quarterly earnings on January 25th, which will provide critical insight on demand trends heading into 2024. Its flagship iPhone 14 model received a lukewarm reception at launch last September. Hence sales growth is expected to significantly lag the 30% jump Apple posted in its previous holiday quarter.
The majority of analysts maintain bullish outlooks on Apple for its faultless execution and fortress balance sheet. But they caution investors to brace for softer sales ahead, especially relative to booming pandemic demand.
Ultimately, Apple’s premium brand and ecosystem lock-in should enable it to fare better than hardware-centric peers as economic conditions tighten. While its stock may continue facing selling pressure alongside Big Tech in the near term, Apple remains well-positioned to outperform over a long-term horizon.
- Apple has lost some $370 billion in market value so far in 2024
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