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Apple and Its Peers Are Bleeding: Is It the US-China Trade War?


May. 23 2019, Published 3:12 p.m. ET

Apple stock

As of the end of the day on May 22, Apple (AAPL) stock had fallen 8.9% so far in May. Its losses were far worse than the 3.0%, 4.3%, and 3.1% month-to-date losses in the S&P 500 Index, the NASDAQ Composite Index, and the Dow Jones Industrial Average, respectively.

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Apple’s peers are also suffering

Within the tech sector, chip makers have been hit the worst this month. US chip makers NVIDIA (NVDA), Qualcomm (QCOM), Advanced Micro Devices (AMD), and Micron (MU) have lost nearly 15.9%, 19.5%, 0.8%, and 17.4%, respectively, in May so far.

On a YTD (year-to-date) basis, though, Apple and these semiconductor companies are still trading in positive territory due to their significant gains in the first four months of 2019. YTD, Apple, NVIDIA, Qualcomm, AMD, and Micron are trading with 15.9%, 14.0%, 21.8%, 7.4%, and 9.5% gains, respectively.

US-China trade war impact

As of 1:35 PM EDT today, Apple, NVIDIA, Qualcomm, Advanced Micro Devices, and Micron have seen daily falls of 1.7%, 4.1%, 3.7%, 4.3%, and 4.2%, respectively.

Prolonged US-China trade tensions could make it difficult for NVIDIA, Qualcomm, AMD, and Micron to sell their chips to many large Chinese tech companies. These trade barriers could badly hurt the future growth outlooks of these chip makers.

In the last couple of quarters, Apple has reported a significant drop in its Product segment sales—especially its iPhone sales. In the six months that ended in March 2019, Apple’s product segment sales were down 3.0% YoY (year-over-year). During the same period, Apple’s iPhone sales fell 15.8% YoY.

According to UBS, the United States’ recent restrictions on Chinese smartphone maker Huawei are likely to affect Apple indirectly. Analyst Timothy Arcuri explained in a note that “a nationalistic movement” in China due to its trade tensions with the United States are likely to hurt iPhone sales.


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