Skip to content

Apple Earnings and FOMO Trade

Some analysts have kept a buy on Apple such Citi. Don’t buy the AI-hype (generative ai) as we think the stock is due for a fall this Thursday. There are several headwinds that have increased the chance of the company failing to meet expectations. Our recent post a week ago noted our negative views on Apple, see Market Outlook Q3 2023.

In addition, Amazon is also reporting today. Both companies represent a big part of the US indices. Thus, a negative reaction today on these stocks will mean a negative move on the indices – NASDAQ and S&P500.

The Earnings Report Forecast

Expect a report that does not meet the expectations with statements regarding articial intellengence to deflect from the report. In other words, the public relations department has to do a great job to sell the future in order to maintain the stock price. However, we see slow growth in China impacting Apple sales. The rebound after the lock-down in China helped Apple but the economy is faltering and Apple depends on 10% of its sales from China. This will be mitigated by positive gains in India.

The recent earnings from Qualcomm does not bode well for Apple. This is confirmation of a slowdown in the phone market. Thus, all eyes will be on the services business at Apple in order to have any hope of higher price target. In our view, this will not happen and we see the valuation of Apple falling.

Stock Momentum will be Impacted from Apple’s Earnings

In short, expect the a downgrade accross the board. Along with the current envirnment recently with the Fitch downgrade and an increasing number of analyst becoming more cautious on the artificial intelligence hype we would avoid Apple in the short term. However, we see this correction as not the final one, but it will give some traders and inverstors to add to their positions for the long-term. In our view, if the market drops today we expect a further drop on Friday right before the weekend. Another possibility is that the market buys the hype initially today but drops tomorrow or on Monday.

Apple Price Chart