With New iPhones Around The Corner, Are Apple Supplier Stocks A Buy?

Our Theme of Apple Component Supplier Stocaks, which includes a diverse set of companies that supply components for Apple’s
AAPL
devices, has gained about 18% year-to-date, roughly in line with the S&P 500, although it has underperformed Apple stock (NASDAQ
NDAQ
: AAPL), which has gained about 44% year-to-date. While the macro-environment has been somewhat favorable for tech and futuristic stocks, with inflation cooling, and the Federal Reserve holding back on interest rate hikes, Apple’s recent performance has actually been pretty mixed. Over Q3 FY’23, the most recently reported quarter, the company saw overall revenues shrink year-over-year, as demand for core computing products including the iPhone, iPad, and Mac fell as tailwinds seen through Covid-19 eased.

That being said, there are some near-term positives for the theme. The semiconductor supply crunch is also easing and this could be helping the companies in our theme to an extent. Apple is slated to unveil its next-generation iPhones this September. The new smartphone is expected to feature meaningful upgrades and possibly design changes versus the iPhone 14, boding well for suppliers from a component content per-device perspective. There is also speculation that Apple will raise pricing on the Pro devices by $100 this time around. This could be overdue, given that Apple has essentially held the starting price of its premium devices at $1,000 over the last six years.

Within our theme, Jabil stock, a company known for making casings for Apple’s iDevices, has been the strongest performer, rising by about 61% year-to-date. On the other side, Texas Instruments
TXN
– which supplies semiconductor components for the iPhone – has been one of the weaker performers with its stock up by just about 1% year-to-date.

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