This bull market started with tech and it might die with tech.
Amazon shares surged higher today on strong cloud revenue but Apple posted slowing sales, including of the iPhone and that has led to a heavy round of profit taking. Shares are down 4.6%.
The entire summer run-up in Apple has now been erased and the fear is that we could get a deeper retracement, perhaps to the 38.2% or 50% levels of the one-way trade that started at the turn of the year. That would imply a further 7-12% decline.
Here is a sense of how revenues have trended in the past year, despite an inflationary environment:
- Rev.: $81.8B, -1% y/y
- iPhone: $39.7B, -2% y/y
- Mac: $6.8B, -7% y/y
- iPad: $5.8B, -20% y/y
- Services: $21.2B, +8% y/y
The bull case for Apple has been rising services fees but if you're selling less hardware, then there isn't a platform for people to buy the services on.
The decline in Apple shares has contributed to a turnaround in the broader market with the S&P 500 now down 21 points to 4480 from a high of 4540. That's a 1% reversal.
