Apple's 3Q May Reverse Defensive Positioning in Tech Trade

Dow Jones01:18

1318 ET - The days of Apple being a defensive purchase in the tech trade may be coming to a close, UBS analysts write in a note. The stock rose around 15% in July, handily outperforming the S&P, as investors rotated out of tech peers with artificial-intelligence capital expenditures under scrutiny and into what seemed like a comparatively solid name among the Magnificent Seven. Now, "tougher iPhone comparisons, modest Services growth, and gross margin pressure over the next several quarters into FY27 could reverse defensive positioning, with limited room for multiple expansion" given the stock's recent valuation, the analysts write. Microsoft's strong print could also spark inflows back into AI-forward stocks, they add. Apple is down 9.6%; Microsoft gains 2.5% and is up 19% this week.

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