To The Moon

First, it was reported last week on Mac production halt, see post - 7 April: M2 chip production halted amid plummeting Mac sales. 

Now, we learn that Apple (AAPL) is likely to face an antitrust investigation by the French Competition Authority in connection with complaints over changes it made to its app tracking policies, Axios reported, citing unnamed sources. The tech giant's shares were down 0.8%.

Tech stocks were lower late Tuesday afternoon, with the Technology Select Sector SPDR Fund (XLK) decreasing 1% and the Philadelphia Semiconductor index down 0.6%.

M2 chip discontinued due to poor sales

Global PC sales keep getting worse and worse, and now sales of Apple Macs are leading the race to the bottom, as research firm Gartner added to PC forecasts and analysts searched for a bottom in the PC market.

Gartner said Tuesday that global PC shipments fell 30% to 55.2 million units in the first quarter, compared with estimates released earlier in the week from rival firm International Data Group showing a 29% drop to 56.9 million.

Gartner said an "unfavorable combination of oversupply and continued low PC demand due to economic uncertainties and a lack of purchase motivation led to the second consecutive quarter of historic year-over-year decline." That follows a quarter where Gartner reported its largest quarterly shipment decline since it began tracking the PC market in the mid-1990s. And that was worse than the previous worst -- last year's third quarter -- and so on.

Back in October, IDC's drop of 15.3%, and Gartner's 19.8%, turned into the worst quarter ever for PC shipments, followed by another worst quarter ever where those deficits grew to IDC's 28.1% and Gartner's 28% declines, compared with the current worsts of 29% and 30%, respectively.

Dark days looming?

A larger-than-average drop came from Apple Inc. (AAPL) shipments, which Gartner said fell 34.2% to 4.8 million units. IDC had said Apple shipment dropped 40.5% to 4.1 million units.

IDC and Gartner disagree on certain metrics like Apple's performance, as has been the case since 2022, but declines appear to be normalizing.

A quarter ago, IDC said Apple shipments only slipped 2.1% to 7.5 million units for the holiday-ending quarter, while Gartner said shipments declined 10.2% to 7 million units. Either way, in its last earnings report, Apple reported that fourth-quarter Mac sales fell 29.4% to $7.7 billion from $10.9 billion a year earlier, well short of the Wall Street consensus of $9.4 billion at the time.

3 Reasons Why Mac Shipments Dropped In 2023

Apple suffered a 40% drop in Mac shipments in Q1 2023. As mentioned, other OEMs such as Lenovo, HP, Dell, and Asus also suffered losses year-over-year, but HP suffered the least painful blow while Apple suffered the most. The question is, why?

- The pandemic boom is over.

- There's an excess of inventory.

- The macroeconomic climate isn't helping.

- The performance of the M1 Pro and M1 Max chips is so beastly, consumers don't feel particularly compelled to upgrade.

Apple will be holding an earnings conference call on Thursday, May 4th at 5:00 PM Eastern.

Price action looks bearish for now

It remains to be seen whether that optimism is already baked into 2023's tech stock run. The PHLX Semiconductor Index is already up 22.8% this year, while the tech-heavy Nasdaq Composite Index has risen 15%, the S&P 500 index has advanced 7%, and the Dow Jones Industrial Index has risen 1.6%. Meanwhile, Apple shares are up 23.8% for the year.

⚠️ Trading Tips: Looking at puts under 160 and calls above 161.6 after the market reacts to the CPI readings on Wednesday. Pay close attention to the successful crossing of MACD to confirm the bearish momentum.

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