As technology stocks have slumped over the past week, traders have found a haven in the sector: Apple Inc.
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Tech shares and the broader market sold off worries about higher interest rates and the omicron coronavirus variant, as the stock rallied Tuesday to close at an all-time high. The iPhone maker is one of only seven stocks in the S&P 500 to rise, and it is adding to that gains Wednesday, up as much as 1.9% to a fresh intraday record.
The stock is getting a boost due to the hype surrounding autonomous vehicles and its planned foray into metaverse-related products, as investors have always prized Apple for its consistent sales growth and hefty cash balance.
Wall Street is viewing it as a safety blanket tech name during this market turbulence, said Dan Ives, analyst at Wedbush who believes that the stock will gain another 11% in the next year.
A month ago, when the stock was underperforming the S&P 500, the trading house warned that a shortage of semiconductors would hamper product sales for the holidays.
Morgan Stanley analysts have been talking about Apple's electric car program after Bloomberg News reported this month that the company is accelerating the effort. Even if the firm wins a 4% share of the global mobility market, its revenue base could double, according to the bank.
In a report, Morgan Stanley technology analysts Katy Huberty and Erik Woodring wrote that mass market adoption of either augmented reality or virtual reality will only occur when Apple enters the race.
Craig Erlam, senior market analyst at Oanda said it was as safe as it gets in the tech space and yet there are still fantastic opportunities in the coming years. There's every reason for investors to feel safe with a stock like that, even in turbulent times. Apple's shares have risen almost 9% since the report on foray into cars, and the stock is now better than the S&P 500 for the year.
The worries about holiday sales may turn out to be overdone. Ives said that the iPhone 13 demand is robust coming out of Black Friday, based on retail checks and supply chain.
While Apple has escaped those concerns, e-commerce companies such as Shopify Inc. and eBay Inc. are suffering backlash. The S&P 500's decline has doubled in value since the day before Thanksgiving, and the index of web merchants has fallen 5% since the day before Thanksgiving. Wayfair Inc. has a 9% decline, eBay is 7%, and Shopify is 5%, among the biggest decliners.
Early data on sales trends over the Thanksgiving weekend has highlighted weaker than expected online spending as more shoppers choose to go out and buy from traditional brick-and mortar retailers.
According to analysts Justin Post and Michael McGovern, Amazon.com is the best e-commerce company for market share gains this holiday due to its relatively healthy supply chain and buy-now pay-later option.
In-store purchases jumped by 43% in the US on Black Friday compared to 11% for e-commerce sales last year, according to data from Mastercard SpendingPulse. Data from Adobe Inc. showed that spending on Cyber Monday fell to $10.7 billion this year from $10.8 billion in 2020.
The results aren't showing a full picture for Mark Stoeckle, chief executive officer and senior portfolio manager at Adams Funds. Early promotions and concerns about adequate inventories probably pulled forward a lot of purchases, he said. It's likely that e-commerce sales will be under pressure from shoppers who are trying to get out.
As convenient as shopping online was when we were with the flu, it's just not as fun, he said.
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