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Why Apple stock should not be in a bear market right now

Yahoo Finance's Brian Sozzi discusses why Apple stock is selling off.

Video Transcript

JULIE HYMAN: And even Apple has not been immune to the carnage over the past several weeks. The tech giant losing its ranking as the world's most valuable company to Saudi Aramco, the shares down nearly 20% since the peak in January of $182 a share. That's where we find Sozzi's Take today. Sozz, you say Apple stock should not be in a bear market.

BRIAN SOZZI: Well, yes, I'm setting this up as three reasons why Apple stocks should not be in a bear market. But let me set this up first with some numbers. First, you look at Apple shares down 22% from the January peak of just over $182 a share. The stock is down about 10% so far in May. But on a positive, it is the best performing FAANG stock year to date, down--

JULIE HYMAN: The least bad performing stock.

BRIAN SOZZI: The least bad, yeah. The best chart on Dirty Block or whatever it is, down 19%. Google shares down 21%. So there are some numbers. Now you have to ask yourself, why is this, in fact, happening? One, I think the market is just lumping Apple in there with other tech stocks. It's just another tech stock. Of course, number two, rising interest rates equals a higher cost of capital. What does that essentially mean? It will cost more for Apple to expand its business. And of course, that is something other tech companies are dealing with as well.

China lockdowns is third on the list here. Apple naturally makes its products overseas and has been impacted by these lockdowns. And last but not least, the US recession. Look, do we need that next iPhone if our current iPhone works? And we are concerned about job loss. So, again, a couple of things here pressuring Apple stock. But here I am, suggesting maybe that shouldn't really be the case. First, keep in mind, Apple is Apple. And it has this host of services that generate consistent and steady cash. That is not necessarily the case at a lot of other tech companies out there. Rivian, of course, comes to top of mind.

The cash pile over at Apple over $190 billion. With that type of coin, you could do a lot of things-- buy back your stock, raise your dividend. And last but not least, the new iPhone, like we were just talking about, likely to come out in September of this year. It may not be the big transformational overhaul, but again, of course, it always offers a few new features that gets folks like us out there buying this stuff.

BRAD SMITH: I mean, at the end of the day, you're right. Consumers in the services division, at least, for Apple, and what they are beneficiary of directly is the fact that consumers don't necessarily look back at all of the different services that they may have signed on for. That's also where Apple has introduced that Apple One type of segment, too, that they can account for services in. But any new devices, that's going to be interesting to watch the cyclicality and how that may shift in this near term, too.

BRIAN SOZZI: It absolutely will. And here's my take overall. It is, beauty is in the eyes of the beholders. And that is me looking at myself and me talking to myself. And oh, the nice--

JULIE HYMAN: Oh, is that--

BRIAN SOZZI: Another nice graphic--

JULIE HYMAN: Is that a Lulu mirror that you're looking in-- that you're gazing into, Sozz?

BRIAN SOZZI: It just might be. My team never ceases to amaze me. That is just absolutely amazing work. But look, right now, Apple shares are out of favor here, but at the end of the day, it's Apple. It has a lot of cash. And you have to think at some point soon, it gets viewed as one of the best tech stocks to own.

JULIE HYMAN: Well, listen, the selling has been wholesale. At some point, maybe starting today, you're going to have people come back in and differentiate a little bit more. It's just all a part of the process, I think.

BRIAN SOZZI: Very true.


BRAD SMITH: Trust the process.

JULIE HYMAN: Trust the process, whew, even if it hurts on the way.