Apple loses footing in China, possibly impacting other sectors

Apple Inc. (AAPL) is already down 8.95% year-to-date, led by rising competition in the key markets, a sluggish innovation cycle, and a host of regulatory challenges.

However, Trading.biz analyst Rahul Nambiampurath believes the stock might move lower in weeks or months to post its relatively dismal China-specific performance in Q1, 2024.

“iPhone shipments have dropped 19% compared to Q1, 2023, which happens to be Apple’s worst quarterly China-based performance since 2020,” added Rahul.

He believes that with Apple’s market share dropping to 15.7%, the correction at the counter might be far from over. The analyst adds that Apple losing its footing in China can have broader implications across the global stock markets.

Impact on other sectors and industries

Here are the top spaces that could be impacted negatively and positively by Apple’s weakening stance in China:

• Semiconductor firms like Broadcom and Qualcomm: Expected negative impact
• Component manufacturing firms like Pegatron and Foxconn: Expected negative impact
• Tech giants like Google: Expected positive impact

Besides the black-and-white impact on the sectors mentioned above, Rahul believes that firms like Samsung will see mixed effects. While the component orders from Apple might slow down, the losses might be offset by the increase in smartphone sales.

Traders might also need to track E-commerce giants like Alibaba and Best Buy closely, as consumer preferences might change.

How can we expect AAPL to perform technically?

From a technical analysis standpoint, AAPL seems to be in a downtrend. Recently, the 50-day EMA line crossed under the 200-day EMA, hinting at a death crossover and a deepening price cut. However, there is a hidden positive or bullish divergence to account for, with the relative strength index making higher lows, whereas the price is making lower lows.

Apple (AAPL) Daily Price Chart: TradingView

A move above the 50-day EMA line or the Orange line can push the price of AAPL higher in the mid-to-long term. AAPL is currently trading at $169, and based on the current momentum, it might have the legs to reach $174.25 in the near term. Furthermore, a surge past the orange line can take it closer to $184.

Daniel Ives, Analyst at Wedbush, has a “Strong Buy” rating for AAPL with a price expectation of $250. Furthermore, Piper Sandler’s Harsh Kumar has a more practical price estimate of $190 for AAPL, which is in line with Rahul’s short-term analysis.