4. Apple Inc (NASDAQ:AAPL)
Number of Hedge Fund Investors: 158
Gil Luria, D.A. Davidson managing director, said in a latest program on CNBC ahead of Apple Inc (NASDAQ:AAPL) quarterly report that his expectations were not high heading into the results. He believes Apple could be among the first companies to feel the heat of a consumer slowdown:
“We’re not expecting a good result or a good outlook. What we’re really hoping for is for Apple to give us visibility and a sense for a stable outlook — that they’ve wrapped their hands around what the impact from tariffs is going to be, and that they can give us an outlook based on that. You just talked a lot about Meta and Microsoft. Those results aren’t just not as bad as feared — those results were actually good. I would not expect that from Apple. Let’s not forget we’re talking about a consumer-driven slowdown, and Apple is the consumer product company. Only later on, a consumer slowdown may lead to an advertising slowdown and maybe eventually to an enterprise technology slowdown. For now, the impact is first going to be felt by Apple, and we want to get our hands around how much of an impact that is tomorrow.”
Apple’s iPhone revenue was above estimates in the latest quarter, but revenue for Services, one of the key pillars of hope for the company’s bulls, came in slightly below estimates. CEO Tim Cook said the company sees a $900 million impact from tariffs in the second quarter, and is unable to predict the effects of duties beyond that.
However, the US and China have reached a truce on tariffs for 90 days. Would this development help the stock?
Apple Inc. (NASDAQ:AAPL) is desperately in need of new catalysts. The company’s revenue in China fell 8% in fiscal year 2024, following a 2% decline the previous year. The Chinese market accounts for about 15% of Apple’s total revenue, so this downtrend cannot be ignored.
Investors had hopes from the Wearables, Home, and Accessories segment, but so far its performance has been weak. Vision Pro faces tough competition from Meta’s $500 Quest and the more affordable Quest 3S, making it hard to justify its $3,500 price tag. The failure of Apple’s HomePod, unable to compete with Amazon’s and Google’s lower-priced offerings, further highlights the challenges in this market.
Apple’s iPhone 16 has not shown promising growth prospects yet and investors are still in a wait-and-see mode on the AI platform.
Columbia Seligman Global Technology Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its Q4 2024 investor letter:
“The fund maintained a position in Apple Inc. (NASDAQ:AAPL) throughout the quarter through the release of the company’s new iPhone 16 in September. Company leaders were excited about the release of the new model, as this is the first model that will feature enhanced AI capabilities through the Apple Intelligence features. Sales for the first few weeks in October and November trailed behind year over year sales from the iPhone 15, as availability of Apple Intelligence was not compatible with all iPhone models. Apple announced a partnership with OpenAI that has allowed the integration of ChatGPT into the Apple ecosystem, separate from the core Apple Intelligence features. This partnership highlights continued progress from Apple to introduce AI capabilities into its products and we expect the iPhone 17 to have even more expansive AI capabilities, increasing potential demand for the new model that is on track to be released in 2025.”
