Apple Shares Wobble as Antitrust Suit Takes Aim at Growth Pillar

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For years, Apple Inc. investors have consoled themselves with the idea that no matter what trends look like for major product categories, growth in services would remain robust. Now, the outlook for that business is on shakier footing.

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The decline also brings Apple’s year-to-date slide near 11%, erasing $337 billion from its market capitalization. The selloff stands in contrast to the rest of big tech, with the Bloomberg Magnificent 7 Index up about 17% this year. Apple was little changed on Friday.“Services has been the driver of growth for Apple, with huge margins, and there’s a question of where the business goes from here,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder.

Regulatory issues are just the latest headache for investors, who are also grappling with weak sales in China, concerns that Apple is behind peers with artificial intelligence, and few obvious catalysts for growth. Bloomberg News recently reported that Apple canceled a long-term effort to build an electric car, and its Vision Pro headset isn’t expected to be a major contributor to revenue in the near-term.

“Shares already look expensive, and if we start to see a deterioration in important high-margin businesses like services and the App Store, then it will look even more expensive,” said Eric Clark, portfolio manager at Accuvest Global Advisors. He sees an “air pocket” for the stock until it nears $155. It last closed at $171.37.

“There’s still a lot of value in the brand, but it is underperforming, has weak growth, a lot of headline risk, and it’s not even cheap,” said Clark. “Honestly, why hold it?”Amazon.com Inc. shares are trading near the highest level since 2021 and inching closer toward an all time high.

 

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