The scare of Omicron led to plummeting of most stocks but Apple. Apple stock shut at 3.1% on Tuesday, portraying itself as a safe haven in a tumultuous market.
Tech giants like Google, Amazon, Meta, and Microsoft closed down with a broader market selloff for the day.
Jerome Powell, Federal Reserve Chairman, said the Fed is looking at speeding up the bond-buying taper in its December meeting. This was followed by,
- The Dow Jones Industrial Average declined 651 points
- Nasdaq composite falling to 1.6%
- S&P 500 plummeting to 1.9%
Investors turned to Apple as the market fell. According to Needham analyst Laura Martin, the company has extraordinary cash flow, which allows it to come through any setbacks in the economy and benefit from dropping prices.
People are bound to jump to quality with companies that they know will pass the storm unscathed without any financial distress, Martin added, also noting that most large-cap tech stocks are doing fine as compared to smaller firms.
Further, Martin said Apple is looking at launching new products to boost growth, possibly also a headset, Martin said.
Apple has been scrutinized for no new products in the last five years. So the prospect of a new product brings a lot of excitement. Likewise, the press is excited about the launch of augmented reality glasses at the next WWDC in June, said Martin.
Martin also pointed at the indications that the current models of Apple, the iPhone Pro models to be precise, are doing well, presumably calling for a big December quarter for the company.
Apple in October stated that it expected record revenue in its fiscal first quarter, crossing its $111.4 billion of last year’s sales, despite its limited supply.
Apple is looking at extraordinary numbers in retail. Tablets, high-end iPhones, will presumably make high margins and high revenue for the fourth quarter of this year, said Martin.
Apple’s cash flow goes to investments in new products as well as to shareholders through dividends and buybacks to return capital. Toni Sacconaghi, Bernstein analyst, told the investors that he expects Apple o continue the repurchasing of shares for the next five years.
Sacconaghi is his note to investors, said that according to their analysis, Apple will likely continue repurchasing ~ 3-4% of its shares every year until the end of 2026. It will also simultaneously grow its dividend per share by 10% every year without taking the net debt on its balance sheet.
Apple shares surged to 25% for the year.