Why Apple stock climbed on Wednesday

On a mixed day for Wall Street, channel checks reveal some positive developments for Apple investors.

| More on:
A woman in business attire sits at a desk in an office situation holding a red apple in her hand and smiling.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

What happened

Shares of Apple (NASDAQ: AAPL) climbed higher on Wednesday, adding as much as 2.4%. As of 12:42 p.m. ET today, the stock was up 1.3%.

The catalyst that sent the stock higher on a mixed market day was news that iPhone demand may be holding up better than investors expected, which could spell additional upside for the stock.

So what

After initiating supply chain checks in China, Wedbush analyst Daniel Ives concluded there have been "steady with slight improvements, despite the zero-COVID-driven demand issues." The Chinese government has acted swiftly, initiating lockdowns for some of the country's largest cities to curb the spread of the pandemic, which has caused intermittent delays in the manufacturing sector. 

Apple has not been immune as the iPhone factories were temporarily shuttered earlier this year.  

However, Ives' checks suggest iPhone sales could surprise to the upside. "We believe iPhone demand is holding up slightly better than expected," the analyst wrote, "despite the various supply issues that have plagued Apple and the rest of the tech sector." Furthermore, Ives believes that worry over the iPhone supply chain and production issues should peak in the June quarter, giving way to optimism regarding the coming launch of the iPhone 14, which is expected this fall.

Now what

It's important to note that any protracted economic downturn would weigh on the tech giant's stock, at least in the short term. With an average iPhone selling price of roughly $825, consumers would likely put off upgrading to the latest device, which in turn would pressure Apple's revenue.

The iPhone is by far the biggest contributor to Apple's revenue. In the March quarter, iPhone sales topped $50.5 billion, up 5.4% year over year, accounting for roughly 52% of the company's total revenue. In the event of a recession, sales could temporarily stall, which would spook investors. 

That said, Apple dominates the global smartphone market, taking home roughly 44% of worldwide smartphone revenue last year. Additionally, with more than $192 billion in cash and marketable securities on its balance sheet, the company has the resources to weather any economic storm, and should be viewed as a safe haven for investors with a long-term outlook. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Danny Vena has positions in Apple. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Apple. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Apple. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on International Stock News

electric vehicle such as Tesla being charged at charging station
International Stock News

Why did the Tesla share price just tumble 7%?

Nasdaq investors just sent the Tesla share price sharply lower.

Read more »

A woman is excited as she reads the latest rumour on her phone.
Broker Notes

Goldman Sachs says this US stock is replacing Tesla in the Magnificent Seven

And no, it's not a tech company. It's in the healthcare sector.

Read more »

A man looking at his laptop and thinking.
Share Gainers

Should I buy Nvidia stock as an Australian investor?

Many Aussies are thinking of jumping on the bandwagon, but they need to think about these issues first.

Read more »

Digital rocket on a laptop.
Broker Notes

Is the Nvidia share price on course to reach US$1,400?

You betcha, says one analyst.

Read more »

A woman holds a soldering tool as she sits in front of a computer screen while working on the manufacturing of technology equipment in a laboratory environment.
International Stock News

Could Nvidia become the most valuable stock on earth?

Can anything stop the Nvidia stock price?

Read more »

A group of young ASX investors sitting around a laptop with an older lady standing behind them explaining how investing works.
International Stock News

What can ASX investors learn from Warren Buffett's latest buys and sells?

We've just found out what Buffett's been buying and selling recently.

Read more »

electric vehicle such as Tesla being charged at charging station
International Stock News

Why Tesla stock tanked in January

Will the electric vehicle leader see earnings decline once again in 2024?

Read more »

A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
International Stock News

Will Nvidia stock be worth more than Microsoft by 2030?

The graphics giant has been growing at a much faster pace than Microsoft, but can it sustain that momentum?

Read more »