Apple Stock Slides Amid Goldman Sachs Move
Apple’s stock has declined nearly 8% this year, with Goldman Sachs recently removing the tech giant from its “Conviction List,” causing shares to drop even further.
Goldman Sachs Analysis
Goldman Sachs analysts made the decision to remove Apple from the U.S. Conviction List after the stock had spent 274 days on it. The list, which typically features between 20 and 25 top buy ideas across U.S. stock coverage, showcases the firm’s most differentiated fundamental options.
Stock Performance
Following the news, Apple’s shares fell by 1.5% on Friday, reaching $178.01. Despite the decrease, Goldman Sachs did not provide specific reasons for the removal in their research note. However, factors such as rating downgrades, catalysts, or better opportunities elsewhere were cited as potential reasons for the change.
Lagging Performance
In comparison to its tech peers in the Magnificent 7 group leading the market, Apple has been struggling due to its lack of a clear artificial intelligence strategy. This has led to underperformance in 2024, with the iPhone maker’s shares down 7.6% while the Nasdaq Composite has seen gains of 7.9%.
Apple’s AI Strategy and Market Challenges
Chief Executive Tim Cook revealed during the company’s earnings call in early February that Apple is dedicated to advancing generative AI. Cook mentioned that Apple is investing significantly in this area and will soon unveil more details about their ongoing work later this year.
Anticipating Apple’s WWDC Conference
The tech industry eagerly awaits Apple’s Worldwide Developers Conference, set for June, as the event where the company is expected to make significant AI announcements that have been long-awaited.
Market Challenges Impact Stock Performance
Apple’s stock has faced challenges beyond just its AI strategy. Sales in China saw a decline of 13% to $20.8 billion in the December quarter compared to the previous year. This drop can be attributed to the slowdown in Beijing’s economy and increased competition from more reasonably priced smartphone alternatives. Additionally, Apple has also felt the impact of weaker sales in the personal computer market.
Goldman Sachs Stance on Apple
Goldman Sachs has maintained its Buy rating and set a price target of $232 for Apple’s stock. Analyst Mike Ng believes that Apple’s growth in installed base, service sector, and commitment to new product innovation will outweigh any cyclical challenges faced by the company. These challenges include reduced demand for iPhone units due to longer replacement cycles and declining consumer interest in the PC and tablet category.