Keep A Watch on This Technology Major - AAPL

Apple Inc.

Apple Inc. (NASDAQ: AAPL) offers innovative personal products like iPhone, iPad, Mac, Apple Watch, and Apple TV. The company derives most of its revenue from the Americas and Europe.

Key Highlights

• Semiconductor shortage is weighing on the company’s performance: Recently, the company’ CEO Tim Cook said that the primary reason for the supply chain-related shortages will be the chip shortage in the ongoing quarter. Apple lost about USD 6 billion dollars due to chip shortage in the previous quarter and the loss is expected to be greater in this quarter. Further, to fulfil the demands of the iPhone, Apple also reduced the production of the iPad and fed the chips into the manufacturing of iPhones.
• Launched New iPhone SE: The company announces the most iPhone features the powerful A15 Bionic, 5G, better battery life, improved durability, and a new camera system with advanced features like Smart HDR 4, Photographic Styles, and Deep Fusion.
• Supplier Concentration Risk: The company’s many components are supplied and manufactured by single-source outsourcing partners in the United States, Asia, and Europe, and final assembly is done by outsourcing partners predominantly in Asia. Failure to execute by these partners may harm the company's cost or supply of components.
• Macro Risk Factors: Global and regional economic circumstances have a substantial impact on the company's operations and performance, and bad economic conditions can have a considerably negative impact on the company's business, results of operations, and financial situation.

 Stock recommendation

The semiconductor shortage has been ongoing since the beginning of the 2021 given the pandemic and growing demand in the automotive sector and it seems that the shortage won’t end before 2023. Apple lost about USD 6 billion dollars due to chip shortage in the previous quarter However, even with such huge losses, Apple is one of the least affected companies as it manufactures most of the chips in-house. Also, recent launches of iPhone series are doing good in the market. Hence, we recommend a “Watch” rating on AAPL stock at the closing price of USD 165.38 (as of March 21, 2022).

Technical Price Chart (as on March 21, 2022). Source: REFINITIV, Analysis by Kalkine Group.

Technical Summary

Note: Investors can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.