Apple Drops Over 3% on New Year's Day... Will It Lose Its No.1 Market Cap Position?

The stock price of Apple, the company with the largest market capitalization, plunged by over 3% from the first trading day of the new year. Following a negative evaluation from an investment bank, Apple’s market cap moved further away from the $3 trillion mark, sparking forecasts that Microsoft (MS) could overtake Apple as the top company by market cap within the year.

[Image source=Reuters Yonhap News]

On the 2nd (local time) in the New York stock market, Apple’s stock closed at $185.64 per share, down 6.89 points (3.58%) from the previous session. This is the lowest level since mid-last month. The market cap also shrank to about $2.887 trillion, moving further away from the $3 trillion threshold.

The sharp decline in Apple’s stock price on this day is attributed to British investment bank Barclays’ downgrade of its investment rating, citing weak iPhone sales forecasts for this year. Barclays downgraded its investment rating on Apple to "underweight" and lowered the target price from $161 to $160. This target price is about 17% lower than the closing price on the last trading day of 2023, which was last Friday.

Barclays analyst Tim Long stated, "We still see weaknesses in iPhone sales volume and composition," adding, "There is also a lack of rebound in Mac, iPad, and wearables." He further noted, "iPhone 15 sales remain bleak, and we cannot find features or upgrades that would make iPhone 16 more attractive," predicting that this sluggish sales trend will continue even after the release of the new iPhone. In particular, the poor performance in China, where reports of an 'iPhone ban' surfaced, is expected to directly impact Apple’s earnings.

Additionally, Apple’s services segment, including the App Store, is also expected to worsen due to various regulations. Analyst Long pointed out, "In 2024, the first ruling on Google’s Traffic Acquisition Costs (TAC) may be issued, and investigations related to the App Store could be intensified," warning that growth in the services segment will begin to slow over the next few years. Relatedly, it was recently revealed that Google, which controls about 90% of the U.S. search engine market, has been paying Apple 36% of its search advertising revenue to have its search engine set as the default on Apple devices. Moreover, Apple is currently embroiled in a patent dispute with medical technology company Masimo over certain Apple Watch models.

Amid these various negative factors, there are even forecasts that Apple could lose its top market cap position to MS. With Apple’s stock price plunging over 3% on this day, the market cap gap with MS, which fell about 1%, has narrowed to around $100 billion. Apple is also continuing a slight decline in after-hours trading.

Economic media outlet CNBC noted that although Apple’s stock price rose about 49% last year, it underperformed compared to other tech stocks like Nvidia and Meta Platforms, which benefited from the artificial intelligence (AI) boom. Other major foreign media also highlighted MS’s strengthening partnership with OpenAI, the developer of ChatGPT, suggesting that MS could surpass Apple to become the market cap leader in the future.

Meanwhile, on the first trading day of the new year, the New York stock market showed a decline centered on tech stocks as Apple’s stock price, the largest by market cap, fell more than 3% amid a rebound in government bond yields. The Nasdaq index, which is tech-stock heavy, closed down 1.63% from the previous session. The S&P 500 index, focused on large-cap stocks, fell 0.57%. In contrast, the blue-chip-heavy Dow Jones Industrial Average ended the day slightly higher.

This content was produced with the assistance of AI translation services.