NVDA - Is Apple a buy if the broader market struggles?

2023-05-11 12:48:11 ET

Apple ( NASDAQ: AAPL ) has marched higher in 2023, helped recently by the release of well-received quarterly results. The upswing has taken the stock to levels not seen since August of 2022.

Even as shares of the iPhone maker have climbed, the overall market has faced ongoing concerns about the broader economy and the future of interest rates. Given the macro uncertainty, does Apple remain a buy, even after the recent gains?

Earnings and Market Leadership

Apple ( AAPL ) received a boost from its latest earnings figures . The tech giant announced Q2 GAAP EPS of $1.52, beating estimates by $0.09. Meanwhile, AAPL also delivered revenue of $94.84B. This was down 2.5% from last year, but the top-line figure still surpassed expectations by $2B.

AAPL rose about 5% in the session following the earnings announcement. This added to upward momentum that began early in the year, after shares touched a 52-week low of $124.17. In Thursday's intraday trading, AAPL was hovering above $173.50, a nearly 40% advance since the close of 2022.

The strength in AAPL has provided support for the major U.S. equity averages. Stocks in general continue to feel the stress of the regional banking crisis, uncertainty about a Fed pivot and concerns that the economy will sink into a recession. Despite these headwinds, the S&P 500 ( SP500 ) still remains in the green in 2023, rising by roughly 7% .

However, that figure appears to be supported by just a select group of names, with Apple being one of the crucial pillars Bespoke Investment Group recently highlighted that Apple and Microsoft ( MSFT ) account for roughly 39% of the S&P gains so far in 2023. When factoring in other names such as Nvidia ( NVDA ) and Meta Platforms ( META ) it represents roughly 60% of the S&P gains.

Is AAPL a Buy?

Wall Street remains quite bullish on shares of Apple ( AAPL ). According to Seeking Alpha data , 24 of the 45 analysts surveyed in the last 90 days label the stock as a Strong Buy. Meanwhile, another 10 analysts believe the company is a Buy.

Elsewhere in the Wall Street community, 9 analysts view AAPL as a Hold, one sees Apple as a Sell and another believes the tech company is a Strong Sell.

The average current price target for Apple sits at $176.95, with the high-end target of $210 and a low-end price target of $116.

Seeking Alpha's Quant Ratings on the other hand are a little bit more reserved, viewing the company as a Hold. This comes as the system of grading quantitative measures lists Apple's valuation at an F. Meanwhile, the Quant Ratings view AAPL with a D- for growth. On the plus side, profitability and momentum received an A+ and an A-, respectively.

See a breakdown below:

What Others Say:

Seeking Alpha contributor Tech Stock Pros believes Apple is a Sell , stating: "Apple’s fiscal Q2 2023 earnings results reported stronger-than-expected iPhone sales; we believe the smartphone market is in oversupply and see a possible correction in the near term.”

Meanwhile, Martin Fjeldhoj, another SA contributor, views the company as a Buy . Fjeldhoj said: "Apple appears to have saturated its ability to create new hardware blockbusters, but the company is creating an entirely new ecosystem around financial services which complements its existing ecosystem.”

Other Options:

If a market participant is not completely sold on AAPL, they can gain exposure to the stock while also remaining diversified through a basket of exchange traded funds. AAPL is owned by 420 funds. Listed below are the five funds that have the heaviest weightings towards the tech company:

• Technology Select Sector SPDR Fund ( XLK ) at 22.42%.
• Fidelity MSCI Information Technology Index ETF ( FTEC ) at 21.88%.
• Vanguard Information Technology ETF ( VGT ) at 21.87%.
• iShares Global Tech ETF ( IX ) at 19.66%.
• iShares U.S. Technology ETF ( IYW ) at 17.79%.

Furthermore, investors can also look at some of Apple's closest competitors, which includes the likes of Dell Technologies Inc. ( DELL ), Hewlett Packard Enterprise Company ( HPE ), and Samsung Electronics Co., Ltd. ( OTCPK:SSNLF ).

More on Apple:

• Apple partner says full-year visibility 'limited' amid economic uncertainty
• Apple's Tap to Pay feature said to face fresh EU antitrust scrutiny
• Apple said to raise $5B in new five-part debt offering
• Is Apple The Future Of Finance?

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