Apple’s
stock
price
is
down
9%
this
year
after
roughly
50%
returns
in
2023,
while
Tesla’s
stock
has
plunged
nearly
30%
after
returning
more
than
100%
the
prior
year.
These
two
companies,
which
are
among
the
most
widely
held
stocks,
suffer
a
similar
ailment:
slowing
prospects
for
growth.
That
means
the
Magnificent
Seven
–
a
group
of
mega-sized
tech
stocks
comprising
Apple,
Tesla, Alphabet (GOOGL),
Amazon.com (AMZN),
Meta
Platforms (META),
Microsoft (MSFT)
and
Nvidia (NVDA)
–
are
no
longer
moving
in
lockstep.
It’s
a
major
turnaround
for
two
tech
icons
that
have
played
key
roles
in
propelling
overall
stock
market
indexes
higher.
Instead,
as
the
stock
market
has
pushed
to
new
highs,
leadership
has
fallen
to
stocks
central
to
the
artificial
intelligence
boom,
such
as
Nvidia
and
Microsoft.
But
for
Jeff
Schulze,
head
of
economic
and
market
strategy
at
ClearBridge
Investments,
this
divergence
is
positive
for
stocks
overall.
“If
everybody’s
not
piling
into
these
perceived
bulletproof
leaders
and
rotating
into
other
areas
that
have
lagged,
that’s
a
really
good
sign
of
the
soft
landing
materialising
and
a
broader
earnings
recovery,”
he
says.
Apple
and
Tesla
Stocks
Underperformed
in
Q1
Apple,
which
accounts
for
5%
of
the
portfolio
weight
of
the Morningstar
US
Market
Index,
was
responsible
for
a
roughly
7%
drag
on
that
index’s
10.2%
total
return
in
the
first
quarter.
Electric
carmaker
Tesla
is
less
heavily
weighted
in
the
index
at
a
little
under
1%,
but
the
firm
also
accounted
for
4%
of
its
losses.
Meanwhile,
the
other
members
of
the
Magnificent
Seven
continued
to
soar
despite
the
threat
of
high
interest
rates
thanks
to
stubbornly
high
inflation.
AI
behemoth
Nvidia
was
responsible
for
21%
of
the
US
market’s
10.2%
overall
gains,
while
Microsoft
accounted
for
7%.
Amazon
and
Meta
accounted
for
6%
each,
while
Alphabet
trailed
slightly
at
2%.
Why
is
Apple
Stock
Down?
Morningstar
equity
analyst William
Kerwin points
to
three
factors
pressuring
Apple
stock.
First,
the
company
is
facing
headwinds
from
slowing
growth
and
declining
sales.
“That’s
really
centred
on
the
iPhone,
which
continues
to
drive
the
business,”
Kerwin
says.
He
points
specifically
to
competition
in
China,
where
domestic
and
more
affordable
alternatives
are
eating
away
at
Apple’s
market
share.
Last
month,
a report from
Counterpoint
Research
indicating
iPhone
sales
in
China
were
down
24%
made
headlines
and
sent
the
stock
falling.
Globally,
slowing
product
refresh
cycles
(how
often
consumers
buy
new
iPhones)
are
also
slowing
down.
Second,
Apple
is
facing
regulatory
scrutiny
in
the
European
Union
as
well
as
the
United
States.
Kerwin
doesn’t
see
this
as
a
major
fundamental
headwind,
but
investors
are
still
reacting
to
negative
headlines.
Third,
there’s
the
factor
that’s
propelled
other
members
of
the
Magnificent
Seven
higher:
AI.
While
Nvidia,
Meta,
and
Microsoft
have
seen
their
shares
soar
on
new
AI
initiatives,
“there’s
been
negative
sentiment
that
[Apple
hasn’t]
announced
anything”,
Kerwin
says.
Analysts
speculate
that
an
AI
announcement
could
come
at
Apple’s
Worldwide
Developers
Conference
this
summer.
Apple’s
Prospects
Morningstar
analysts
still
see
Apple
stock
as
fairly
valued
after
spending
much
of
2023
in
overvalued
territory.
The
stock
is
trading
in
the
$170
range,
compared
with
Morningstar’s
fair
value
estimate
of
$160
per
share.
“We
expect
it
to
be
a
mild
to
down
year
for
Apple,”
Kerwin
says.
He
says
a
major
AI
announcement
this
summer
or
a
return
to
growth
for
the
iPhone
later
this
year
or
in
2025
could
spur
a
rally.
Why
Is
Tesla
Stock
Down?
Tesla’s
shares
have
seen
even
more
dramatic
losses
this
year.
Morningstar
equities
strategist Seth
Goldstein says
the
company’s
slowing
delivery
growth
is
contributing
to
that
slide.
The
carmaker
reported
its
first negative
quarterly
deliveries
number in
four
years
this
month,
a
drop
that
was
significantly
worse
than
investors
expected.
In
a press
release,
the
company
attributed
that
slowdown
to
preparation
ahead
of
production
of
its
updated
Model
3,
as
well
as
shutdowns
at
its
Berlin
factory
in
the
wake
of
the
conflict
in
the
Red
Sea
and
an
arson
attack.
“Tesla
is
a
high-growth
stock,
which
means
slowing
growth
assumptions
can
have
an
outsized
impact
on
its
price,”
Goldstein
says.
“The
stock
has
sold
off
as
investors
reset
expectations
for
lower
growth
in
the
next
one
to
two
years.”
He
adds
that
broader
concerns
about
the
slowing
market
for
electric
vehicles
as
a
whole
are
also
weighing
on
shares.
A
barrage
of
negative
headlines
hasn’t
helped
Tesla
either.
A report that
the
company
scrapped
plans
for
a
more
affordable
electric
car
sent
shares
plummeting
last
week.
Tesla’s
Prospects
Despite
Tesla’s
challenges,
Morningstar
analysts
view
the
stock
as
fairly
valued.
They
also
assign
it
a
Very
High
uncertainty
rating.
Goldstein
says
the
firm
could
benefit
from
shifting
focus
to
profits
over
volume
growth
this
year.
“While
this
may
have
led
to
the
deliveries
decline,
we
want
to
see
if
the
strategy
has
preserved
profits
and
if
margins
are
in
line
with
the
fourth
quarter.”
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