3 Reasons Why Investors Shouldn’t Worry About Apple
After Friday’s rough selloff, investors came into this week hoping for some “juice” from Monday’s Apple event.
On the 5-minute intraday chart, you can see exactly when and where the disappointment took hold. At about 1:30 pm Eastern time, Apple ($AAPL) peaked at $317.40, the stock’s all-time intraday high (arrow). Within an hour, the stock had dropped to $303, and then failed to bounce into the close.
On the daily chart below, Apple fell from an all-time high to a two-week low in one session. A shooting star candle formed (arrow), and the stock closed near its low of the day on above-average volume, both negative signs.
Apple’s Google Gemini Partnership
Why were investors disappointed? WWDC is often used for major product announcements and teases. While there were some significant software updates and improvements, there was no one takeaway that moved the needle for investors.
A much-needed upgrade to Apple’s Siri AI artificial intelligence platform also proved to be somewhat disappointing, as it is designed around Google’s Gemini technology. Some critics suggested that Apple had no choice but to team up with Google ($GOOGL) or risk falling behind in the AI race.
Are Investors Overreacting?
Here are three reasons why investors shouldn’t worry about Apple after Monday’s WWDC reaction:
1. Even though the stock closed poorly, Apple did manage to touch an all-time high on Monday. This tells me there are willing buyers out there, they just need a proper catalyst to motivate them.
2. I expect that catalyst to occur after new CEO John Ternus takes over for Tim Cook, who will be stepping down on September 1. Cook isn’t known for his ego; he’s never been one to shine the spotlight on himself. Don’t be shocked if Cook left a few surprises for Ternus to unveil, to start him off on the right foot with investors.
3. Criticism over Apple’s partnership with Google is overdone. Instead of allowing internal delays in its own AI program to become detrimental, forcing users to wait for an in-house solution, Apple is leveraging Gemini’s expertise right now. This means Apple remains competitive at the moment, while reserving the right to use in-house technology in the future.
Bottom Line
Investors had a negative overreaction to Apple’s WWDC event. Perhaps they were skittish after Friday’s selloff. We believe concerns related to this year’s WWDC are overblown and will be resolved later this year.
At the time of publication, Ponsi was long AAPL.
