Apple slides on Foxconn outlook as Microsoft nears market-cap takeover

Apple has shed more than $165 billion in cap so far this week, putting Microsoft within striking distance of overtaking it as the world's most valuable stock.

Jan 5, 2024 - 19:30

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Apple slides on Foxconn outlook as Microsoft nears market-cap takeover

Apple (AAPL) - Get Free Report shares extended declines Friday, with the stock losing more than $165 billion in value so far this week, after its key supply partner forecast a rare revenue decline amid stagnant smartphone demand.

Taiwan-based Foxconn, a key Apple assembler responsible for around 70% of the tech giant's iPhone shipments, said first-quarter revenue would likely decline from the year-earlier period's levels following what it described as a "flattish" holiday quarter for consumer electronics sales.

The cautious outlook has added to concern that the tech giant, which traded at a record price last month, giving it a market value of more than $3 trillion, faces headwinds into the first half of the year tied to weakening iPhone demand and an uneven consumer backdrop in China.

Wall Street analysts are also lining up to lower their ratings on the stock, with both Barclays and Piper Sandler highlighting near-term risks in separate notes this week. Their moves put the proportion of analysts who are bearish on the stock at the highest levels in three years.

Apple shares were marked 0.5% lower in premarket trading to indicate an opening bell price of $181.01 each. Such a move would extend the stock's 2023 decline to around 6%.

Apple, Microsoft: rivals for most-valuable stock

Microsoft (MSFT) - Get Free Report shares are also down this year, but the tech giant's 2.15% decline has it nipping at Apple's heels for the title of most-valuable stock, with a market cap of $2.73 trillion compared with Apple's $2.83 trillion.

Betting against Apple is a risky proposition, however, with data from S3 Partners noting that short-sellers of the stock lost more than $7.3 billion last year. Only two other shorts, Tesla (TSLA) - Get Free Report and Nvidia (NVDA) - Get Free Report, cost investors more.

Apple will publish its fiscal-first-quarter earnings report after the close on Feb. 1, with investors looking for a bottom line of $2.09 a share on revenue of $117.87 billion.

The group itself said December-quarter sales would likely be flat with the $117 billion total recorded over the year-earlier period. That forecast fell shy of Wall Street's 5% gain and followed the tech giant's fourth consecutive sequential revenue decline and big pullbacks in Mac, iPad and Apple Watch sales.

Group revenue ticked down 0.7% to $89.5 billion, just ahead of the Wall Street consensus forecast of $89.3 billion. iPhone sales surprised to the upside with a 2.8% gain and a $43.81 billion total.

Earnings for the quarter were up 13% to $1.46 a share, powered for the most part by solid services revenue – Apple's widest-margin business – and a record overall total for its global installed user base.