There are two main indicators investors need to watch out for during volatile times, such as today’s S&P 500 path lower. One of them is, of course, keeping track of the underlying developments in the news cycle driving the price action, which today seem to be centered around the trade tariffs being implemented by President Trump on several trading partners with the United States economy.
That one is a bit more complex to understand and follow since public information tends to lag the price action of the entire market. When it comes to price action, that’s the secondary gauge investors can follow more successfully to figure out where sentiment is going or shifting toward. However, not all price action is treated equally in times like these, so investors need to focus on the so-called “darling” names of the market and follow them religiously.
One undeniable stock that fits this description is Apple (NASDAQ:AAPL). Recently, shares of Apple have been the subject of much negativity, spurred by the uncertainty that these tariffs are bringing to its products and logistics setup with Asian countries. Most iPhones and laptops are remanufactured in the region that was placed under the most tariff pressure.
What Happens Now With Apple?
The speculation that iPhones will now cost over $2,500 a piece has enough logic behind it; if labor costs and other factors are set to increase due to these tariffs, it only makes sense that Apple will then pass these costs down to the consumer. However, some countries like Taiwan and Vietnam have already agreed to negotiate with the United States.
This is part of the first gauge, timing, and understanding of the news cycle, and these negotiations might clear the way for a bit more certainty moving forward in Apple. With this in mind, it is time to start gauging the price action in the stock over the past week to figure out whether now is the time to buy back into it.
When the market gives up on a name like Apple, it might be time to consider that the pessimism around participants has hit its maximum level, creating an asymmetric opportunity to take advantage of this fear. As Warren Buffett says, “Be greedy when others are fearful."
Speaking of Buffett, he also decided to sell some Apple stock before these tariffs were announced, knowing that the uncertainty and economic impact might negatively affect it. However, the reasons for his sale seem to already be subsiding as these negotiations take place, leaving investors with the opportunity to turn things around.
Is There a Path Higher in Apple Stock?
Now that the stock has traded down to 72% of its 52-week high, it is in official bearish territory, as defined by Wall Street as a 20% or more decline from highs. This means that the market has essentially priced in the worst-case scenario for the company, meaning that everyone now expects iPhones to really cost $2,500 or more.
Which likely won’t be the case here. Knowing this, investors can come in and let cooler heads prevail, understanding that Apple is one of those names that are too big, not only in the United States economy but also globally, to let it fail or at least keep declining.
When the panic and uncertainty subside, it will be clear that Apple is one of the first names to recover. This won’t have to stay a thesis for much longer, as the market is already giving investors subtle signs of support for those who know what to look for.
On a valuation basis, Apple stock still trades at a significant premium of 49.9x price-to-book (P/B) compared to the rest of the technology sector. The market will always have a good reason to overpay for stocks that can outperform the peer group as well as the entire market, and Apple has just the right fundamental components to do this.
Understanding that the odds are now stacked in Apple’s favor, analysts from Raymond James have decided to reiterate their Buy rating on the company, this time also boosting their valuation targets to a high of $250 per share. Not only are these analysts calling for a net upside potential of as much as 33% from today’s low price, but here’s why that means a lot more today.
Wall Street isn’t fond of backing stocks that have seen such bearish price action in recent days or weeks, lest these analysts damage their reputation and even risk their careers. This is why looking at the early April 2025 Raymond James boost means a lot more today than ever before.
Apple stock is about to regain confidence in the market once the implications of trade tariff negotiations start to make it clear that Apple is one of the first names to rebound from this mess.