Apple Market Cap Nears $2 Trillion As Tech Sell-Off Deepens

Apple (NYSE: AAPL) hit a milestone of reaching $3 trillion in market cap on the first trading day of 2022. However, it has plunged since, and yesterday its market cap was barely above $2 trillion.

Apple was the first company ever to hit a market cap of $1 trillion in 2020. In August 2020, it became the first company ever to hit a market cap of $2 trillion. It has been the world’s largest company for quite some time but has briefly lost the position a couple of times.

Apple is still the most valuable company

For instance, last year, Microsoft’s market cap surpassed that of Apple briefly. Again, this year, Saudi Aramco’s market cap went ahead of Apple’s. However, Apple soon regained the top spot. Despite the recent crash, Apple is still the world’s most valuable company.

While the broader US stock markets crashed in 2022, the sell-off has been quite severe in tech names. Microsoft and Alphabet have lost their status as $2 trillion dollar companies while the market caps of Meta Platforms, Tesla, and Amazon have plunged below $1 trillion.

Only Apple, Alphabet, and Microsoft now have a market cap in excess of $1 trillion. Incidentally, all the FAANG stocks are underperforming the S&P 500 this year. Apple is still the best performer in the lot though and is down around 27% which is less than the drawdown in Nasdaq.

Tech stocks crash in 2022

Meta Platforms is the worst-performing FAANG stock of the year and along with Tesla, it is among the top S&P 500 losers this year. Amazon and Netflix have also lost over half of their market cap this year.

Amazon in fact became the first company ever to lose over $1 trillion in market cap. Most analysts however are bullish on the stock for 2023 and many brokerages have listed it as their top pick for 2023.

Is Apple still a safe haven?

While US stock markets have been weak throughout the year and hit one low after the other, Apple stock held off relatively well. Wall Street analysts saw Apple along with Alphabet as relatively safe bets. The two have somewhat justified the status and are the best performing FAANGs in that order and have fallen much less than FAANG peers.

However, Apple has fallen to new 52-week lows and has given up most of its pandemic gains. Many see the fall in Apple stock as a sign of trouble for wider markets also.

Analyst sees technical bearishness in AAPL stock

In a client note, Matt Maley, chief market strategist at Miller Tabak said, “One of the most important items we’ll be watching over the next week or two will be the action in Apple,” he added, “The reason that the $130 level is so important is because it’s where the lows from June come in (which was the low for 2022). Therefore, any meaningful break would give the stock a key ‘lower-low’…and that would be quite bearish because Apple has already broken below its trend-line from the March 2020 pandemic lows (and below its 200-day moving average).”

Maley said that a breakdown in Apple stock would not bode well for the wider markets also.

Supply chain issues take a toll on Apple

Apple has been hit by supply chain issues due to the rise in COVID-19 infections in China, its biggest sourcing hub. Apple previously admitted to supply chain issues amid the outbreak at Foxconn’s facility in China. Several shoppers complained about the unavailability of the iPhone 14 during Cyber Week.

In his note, JPMorgan tech analyst Samik Chatterjee said, “We are again moderating our expectations for the Dec-Q (F1Q23) on the back of the impact of the recent supply chain challenges faced by Apple in relation to operations at Hon Hai’s assembly facility in Zhengzhou, China.”

iPhone sales might be hit in the holiday season

The supply chain snags have come amid the holiday season which is seasonally strong for Apple. Chatterjee added, “While the rapid extension of lead times for the iPhone 14 Pro / Pro Max has slowed down and in fact began to moderate in recent weeks, it still remains elevated relative to the lead times seen prior to the COVID outbreak in Zhengzhou as we continue to see the supply shortfall continuing through year-end and impacting the typical seasonal uptick in iPhone volumes seen in Dec-Q.”

Is Warren Buffett buying more Apple shares?

Berkshire Hathaway chairman Warren Buffett added more Apple shares in the first half of 2022 after a gap of more than three years. Buffett instead sold some shares over the period, which he has admitted was a mistake.

Now with APPL stock falling to the lowest level since 2020, markets are wondering if the Oracle of Omaha would buy it again. Berkshire Hathaway would release its fourth quarter 13F in mid-February which would provide us insights into Buffett’s stock buying and selling activity for the quarter.

The next key indicator that investors would watch would be Apple’s earnings for the December quarter which would be released towards the end of January. Markets would look for the commentary on the iPhone supply and demand environment amid the deteriorating global economy and rising COVID-19 cases in China.