Apple Inc. (AAPL) faced a downturn on Tuesday as its stock dipped to its lowest level of the year following reports of sluggish iPhone sales in China. With the tech giant navigating various challenges, market watchers are speculating on the response of prominent investor Warren Buffett.
Year-to-date, Apple’s stock has experienced a nearly 12% decline, contrasting with the 6.5% gain observed in the S&P 500 index.
The decline was exacerbated on Monday when European Union regulators fined Apple approximately $2 billion for breaching antitrust regulations with its App Store policies, causing a 2.5% drop in Apple stock.
On Tuesday’s market, Apple shares fell by 2.8%, closing at $170.12, driven by disappointing iPhone sales figures from China. According to research firm Counterpoint Research, iPhone unit sales in China plummeted by 24% during the first six weeks of 2024 compared to the same period last year. Meanwhile, Huawei, a Chinese rival, experienced a significant 64% surge in sales during the same timeframe. However, overall smartphone sales in China declined by 7% during the first six weeks of the year, Counterpoint reported.
Counterpoint analyst Mengmeng Zhang attributed Apple’s challenges in the Chinese market to intense competition from Huawei in the premium smartphone segment and aggressive pricing strategies adopted by domestic vendors Oppo, Vivo, and Xiaomi in the midrange handset market.
Additionally, Taiwan-based contract manufacturer Foxconn reported a 12% decrease in February sales year-over-year, indicating a slowdown in Apple product sales.
Wedbush Securities analyst Daniel Ives described the sentiment surrounding Apple stock as “dismal,” highlighting concerns that the company is missing out on the artificial intelligence (AI) revolution currently captivating Wall Street. This sentiment follows Apple’s recent decision to halt development of an autonomous electric car project after investing over $10 billion in the endeavor.
Despite the challenges, Ives maintained an outperform rating on Apple stock with a 12-month price target of $250, anticipating a positive shift in sentiment around the company’s Worldwide Developers Conference in June, where Apple is expected to showcase its AI innovations.
Meanwhile, market observers are curious about the actions of Warren Buffett, whose Berkshire Hathaway holding company owns a nearly 6% stake in Apple. Jordan Klein, managing director at Mizuho Securities, speculated on Buffett’s response to Apple’s current predicament, suggesting that if Buffett were to sell down his stake, it could negatively impact the stock price.
Looking ahead, analysts believe that Apple’s ability to introduce compelling AI innovations could help revitalize investor confidence and mitigate the current challenges facing the company.
