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Why Apple Stock Should Be A Winner This Week

A volatile week in the market is coming to an end – but Apple stock is likely to be a relative winner. Here is what helped to keep AAPL afloat during turbulent times.

On Tuesday, September 13, the S&P 500  (SPY) - Get S&P 500 ETF TRUST ETF Report had its worst day in over two years. As a result, the broad market is on track to log yet another week of losses, the fifth in the past six weeks.

But Apple stock  (AAPL) - Get Apple Inc. Report investors have not felt the pinch as badly. As the chart below depicts, AAPL has been down a manageable 1.2% in the past five trading days – less than half the size of the fall in the S&P 500 and Nasdaq 100, and only about one-third as bad a dip as the losses seen in the tech sector.

Figure 1: Why Apple Stock Should Be A Winner This Week

Figure 1: Why Apple Stock Should Be A Winner This Week

Below, I discuss why Apple bulls come out celebrating yet another week of outperformance over the benchmark: AAPL is now up 15% for the past 3 months against SPY’s timid 5% gains.

Figure 2: Why Apple Stock Should Be A Winner This Week

Figure 2: Why Apple Stock Should Be A Winner This Week

(Read more from Apple Maven: Apple’s iPhone 14 Launch: The Biggest Surprise For Investors)

Delayed iPhone 14 Reaction

What separated Apple stock’s performance from that of the rest of the market was Monday’s market action. While the S&P 500 finished the September 12 session higher by 1.1%, AAPL climbed by a much more exciting 3.9%.

In fact, it would not be a stretch to say that the entire market benefitted from the spike in Apple's share price. Keep in mind that AAPL accounts for about 7% of the S&P 500.

The reason for the strong performance was clear: the iPhone 14. To be clear, Apple’s new smartphone was introduced last week, on September 7. On that day, AAPL shares did not move much and, in fact, trailed the S&P 500 for the day.

The big development came only this week, and straight from Wall Street – not from Cupertino, California. As reported by the Apple Maven channel, a few analysts presented their findings on the initial demand for the iPhone 14. And they were impressed by what they saw.

Wedbush’s Dan Ives, who sees AAPL climbing to $220 per share, noted that “demand and orders for iPhone 14 are tracking slightly ahead of iPhone 13 and [ahead of his] expectations”.

JPMorgan’s Samik Chatterjee went one step further and reported that (1) the Pro and Pro Max trims have been doing particularly well in China and the US, which combined account for half of global iPhone sales; and (2) the new Watch Ultra is also seeing traction out of the gates.

On Wednesday, September 14, Apple jumped another 60 basis points ahead of the S&P 500. The driver seems to be fundamentally the same. This time, it was Morgan Stanley’s turn to report that the iPhone 14 cycle is looking stronger than expected already.

The analyst’s quote below shows that the bullish narrative on AAPL has been well supported by the company’s new wave of product launches:

“Collectively, these early cycle data points are helping to dispel fears of material iPhone weakness, aligning with our view that the iPhone is a more staples-like product more resilient to macro shocks (although we caution that it's still very early in the cycle).”

Ask Twitter

Apple stock has outperformed the S&P 500 in the past 5 trading days (and past 3 months, for that matter). To credit are several Wall Street reports that the iPhone 14 cycle is already showing early signs of strength. WIll AAPL continue to outperform the market?

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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting the Apple Maven)