Apple is very likely just the first of many multinational companies that are about to issue earnings and revenue warnings. Many companies have alluded to the fact that fact that the coronavirus could impact the health of their businesses, but Apple is the first major player to state specifically how it will be impacted.
Apple says it could see its upcoming quarterly revenue number come in $4-7 billion short of previous expectations or around 10% depending on where the final number comes in.
The question now becomes where does the next domino fall? Companies with heavy exposure to China are already down significantly on the year relative to the S&P 500.
The one sector that is exposed to China like perhaps no other is the semiconductor group. Not only is much of their supply chain in China, but several count Apple as a big customer. If Apple is going to struggle, it makes sense that chip makers are going to struggle as well.
Companies that could see their stock prices drop in the coming months include Texas Instruments, Qualcomm, Micron and Broadcom. Businesses whose models also depend on these industries, such as Qorvo, also could be affected. Each of the companies listed have at least 40-50% of their revenue coming from China.
How To Play This In Your Portfolio
Avoid adding to semiconductor ETFs and other funds with heavy semiconductor exposure.
In particular, stay away from:
- iShares PHLX Semiconductor ETF (SOXX)
- VanEck Vectors Semiconductor ETF (SMH)
- SPDR S&P Semiconductor ETF (XSD)
- Invesco Dynamic Semiconductors ETF (PSI)
If you liked this article/video, please click the LIKE button or share it on Twitter, Facebook, etc. using the buttons below.
Feel free to leave any comments, questions, or thoughts on the ideas presented here (and sign-up if you haven't already).
Follow me and receive periodic notifications when I post here by clicking the FOLLOW button at the top of the page!