Apple's market value is approaching $3 trillion, can it sustain its upward momentum in the second half of the year?

Moomoo Learn wrote a column · Jun 28, 2023 07:48

On June 28, $Apple(AAPL.US)$ 's shares opened at $185.89, reached a high of $188.39 and ended at $188.06, up 1.5%, a new high. This means that Apple's market capitalization has reached $2.958 trillion.

Apple's market value is approaching $3 trillion, can it sustain its upward momentum in the second half of the year?

Against the backdrop of the global recession, investors' risk aversion is on the rise, and Apple happens to be in line with investors' "flight to safety" positioning, being used by many investors as a "safe haven" against unfavorable factors. In the first half of this year, when the banking industry in Europe and the United States appeared to be in crisis, Apple once won the favor of investors. Although the investment boom in AI and Apple's new product Vision Pro have driven Apple's stock price soaring, there are differences in whether the upward trend can be continued in the second half of the year, with the following points worth our attention.

1. UBS downgrades Apple to "neutral" amid bullishness

On June 13, UBS analyst David Vogt downgraded Apple's stock rating from [Buy] to [Neutral], with a price target of $190, below the average Wall Street price target of $220. David Vogt downgraded Apple Inc. for two main reasons.
First, from a performance perspective, David Vogt's team survey data shows that people's willingness to buy iPhones has weakened over the next 12 months. The market is expected to remain weak in the second half of the year, and Apple's related product sales growth is likely to remain under pressure.
Second, from a valuation perspective, Apple's current PE ratio of about 29 times is higher than the average of the past five years and is about 50 percent higher than the average valuation of S&P 500 constituents. David Vogt analysts believe that while the premium is reasonable, it is also increasingly unlikely that the stock will continue to rise, given the growing headwinds to business growth.

2. The current concentration of U.S. stocks is higher than during the bubble of 2000

The AI investment boom is similar to the Internet explosion of the 1990s, with the U.S. stock market showing a high degree of concentration, even much higher than the stock market in 1999-2000. Jason Hsu, chief economist at East West Bancorp, said the imbalance is worrisome. He believes that artificial intelligence is currently a super-hot industry, even one in which there is a bubble. As things stand, there is a real possibility that Apple's shares are somewhat overvalued. Both absolute comparisons with historical stock prices and calculations of intrinsic value reflect that the company's stock price may have some premium relative to its actual value.

3. Risk from economic recession

Views from Zhitong Financial website suggests that Apple also faces a short-term risk of a decline in consumer discretionary income due to the possibility of major macroeconomic headwinds such as a recession in the second half of the year. If consumers spend less on luxury goods, Apple's core revenue-driving products, such as the iPhone, iPad and Mac lines, will experience a decline in sales and popularity. Lower margins and sales figures would hurt fiscal 2023 results, which could lead to a significant market correction in the company's stock price.

Overall, regardless of whether Apple's stock price can approach the $3 trillion mark, it is important to focus on market risk and also on the sustainability of Apple's performance to make the right investment decisions.

How do you think Apple's stock will move in the second half of the year? Feel free to leave your thoughts in the comments section!

Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only. Read more

Translate

Report

11K Views

Comment

Moomoo Learn

Moomoo Learn Official Account

Easy learning at moomoo Learn. Let's trade smarter！

23KFollowers

105Following

25KVisitors