Apple shares fall due to iPhone sales problems in China

apple (Camel) The stock fell to its lowest level of the year on Tuesday on news of weak iPhone sales in China. With the consumer electronics giant facing pressure on multiple fronts, one Wall Street trader is wondering how major investor Warren Buffett will respond.

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Year-to-date, Apple stock is down roughly 12%. This compares to a gain of 6.5% for the S&P 500.

Apple stock on Monday fell 2.5% after European Union regulators fined Apple nearly $2 billion for violating EU antitrust rules with its App Store policies.

On the stock market today, Apple stock fell 2.8% to close at 170.12 on the back of disappointing iPhone sales data from China.

Apple's iPhone unit sales fell 24% in China during the first six weeks of 2024 compared to the same period last year, market research firm Counterpoint Research reported. Meanwhile, sales of China-based rival Huawei jumped 64%. Counterpoint said. However, the research firm said that overall smartphone sales in China fell by 7% during the first six weeks of the year.

Counterpoint analyst Mengmeng Zhang said Apple faces stiff competition in China's premium smartphone segment from rising Huawei with its Mate 60 series devices. In addition, Apple is under pressure in the mid-range phone space due to competitive pricing from local vendors. Such as Oppo, Vivo and Xiaomi, Zhang said in a report.

Apple stock sentiment called 'dismal'

Also on Tuesday, Foxconn, the Taiwan-based contract manufacturer that assembles iPhones, said its February sales fell 12% from a year earlier, suggesting sales of Apple products are slowing.

Sentiment in Apple shares is “dismal” because the company is missing out on the artificial intelligence revolution that is now captivating Wall Street, Wedbush Securities analyst Daniel Ives said.

News of weak iPhone sales in China comes on the heels of Apple's decision to end development of a self-driving electric car after a decade of work. Apple reportedly spent more than $10 billion on the Apple Car project before shutting it down last week to focus on artificial intelligence.

In a note to client, Ives reiterated his outperform rating on Apple shares with a 12-month price target of $250.

Ives said he believes sentiment in Apple shares will improve during the company's Worldwide Developers Conference in June. He said that Apple is likely to discuss its innovations in the field of artificial intelligence at the WWDC conference.

“Right now, the data points are not all roses and rainbows for Apple, and the main risk remains in the name,” Ives said. “However, our view is on navigating through the next Q1 and Q2 and transitioning to the other side of easier installations, the AI ​​announcement at WWDC, a stronger upgrade cycle for the iPhone 16, and monetization opportunities from the installed gold base (for iPhone owners).” ..”

Will Warren Buffett sell Apple shares?

Elsewhere on Wall Street, Jordan Klein, managing director of technology, media and telecommunications trading at Mizuho Securities, wondered what Warren Buffett would do with his company's massive stake in Apple.

In a note to the client, Klein wrote: “What happens to AAPL sentiment and stock price when/if we learn Uncle Warren sells his huge stake? I think the stock will be slaughtered.”

Buffett Holdings Company Berkshire Hathaway (I ride) owns approximately 6% of Apple shares, or 905 million shares.

“He has increased his stake a lot, and given that it is one of his single stock positions (if not his largest) and he feels like he is in trouble, I could see him selling sooner or later,” Klein said. “In fact, I wouldn't be surprised if he sells now. He knows that when (SEC Form) 13F shows he starts selling, AAPL shares will go bust as retail investors rush out.”

Berkshire's next 13F, which shows its holdings as of the end of the first quarter, is due around May 15. Barron reported.

Artificial intelligence news could boost Apple shares

Apple's luster as an innovator has waned after ending its Apple Car project and launching a Vision Pro computer headset that is “not yet ready for prime time,” Rosenblatt Securities analyst Barton Crockett said in a note to clients.

Apple will need to introduce some impressive AI innovations to restore some of its former luster, Crockett said. He rates Apple shares as Neutral with a price target of 189.

“If Apple can unlock inspiring new capabilities in artificial intelligence, that could go some way to alleviating the current chaos,” he said.

Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz For more stories on consumer technology, software and semiconductor stocks.

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