a ‘flight to quality’ and new products are shielding the tech giant’s stock from the tech selloff
by its own standards, Apple is having a lukewarm 2022. its stock price is down over 9% since the turn of the year and it’s at risk of losing its tag as the world’s most valuable company (by market cap) to Saudi Aramco. despite those gloomy stats, Apple is having a better year than most of its tech peers, indicating strength even amidst a heavy broad market selloff that saw the Nasdaq 100 index down 17% as of March 9.
on March 9, Apple’s stock price saw a jump of over 3% following the announcement of a new slate of products in its ‘peek performance’ event. is it a short term boost or a long term signal to buy in?
one of the most popular tropes about Apple refers to its ‘fans’ or people who show an extreme dedication to buying only its products in whichever category they’re available, regardless of the price tag. such consumers usually harp on the quality and seamlessness of integration across Apple’s ecosystem of devices. that is now coming to the fore as Apple looks to not only make the ecosystem more seamless but also onboard new fans.
for the former, it is using its in-house chips across more and more new devices, with the M1 now powering Macbook, iMac, and iPad devices of different generations and features. with this, Apple which already offered software compatibility across its devices is now seeking to claw its way up the ladder on hardware as well. not only this, reducing reliance on third party chip-makers gives Apple more control over its supply chain in a fragile situation.
for the latter, it has introduced an ever more affordable version of the iPhone with the latest SE model costing only $429 in the US. it has been seen in the past that users who buy an Apple device, particularly the iPhone, tend to stick with it and gradually buy into more of the ecosystem.
as noted earlier, Apple has been less affected by the market conditions than most of its tech peers. this is a reflection of the fact that it has also been expanding its service-offerings such as streaming services. more importantly, it has managed to hedge itself a position in the lucrative advertising business with privacy changes to its operating system that mostly saw Meta (Facebook) lose out on some of its core business.
in an uncertain market, a large number of investors tend to place their faith in established companies that provide quality products and services. Apple certainly falls into this category, and this flight of investors to quality stocks could see it weather these stormy market conditions and fly out the blocks when the market sentiment reverses.