What Happened?
Shares of iPhone and iPad maker Apple (NASDAQ:AAPL) jumped 5.7% in the afternoon session after the company announced a new $100 billion commitment to American manufacturing.
A White House official revealed the plan, which accelerated Apple's total domestic investment to $600 billion over the next four years. The company's CEO previously stated this investment aimed to drive innovation and create jobs in advanced manufacturing and artificial intelligence. This news built on recent positive momentum. An analyst at Goldman Sachs reiterated a Buy rating on the stock, citing strong App Store performance data. This positive sentiment also followed Apple's strong third-quarter results where the company topped analyst expectations for revenue and profit.
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What Is The Market Telling Us
Apple’s shares are not very volatile and have only had 4 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 9.1% on the news that President Trump announced "reciprocal tariffs" on all US imports, set at a minimum rate of 10%.
Apple, in particular, stood out as especially vulnerable due to its entrenched reliance on production in Asia, especially its China operations. The reciprocal tariffs pushed effective rates on all Chinese imports above 50%. With many of its manufacturing hubs now subject to elevated tariff burdens, Apple faces fresh challenges. Shifting production isn't something you do over the weekend. It takes years and a ton of cash, and even then, there could be more unexpected challenges. This could include factory buildouts, retraining workers, and moving equipment, which could quickly become a logistical headache. So, in the short term, this could hit Apple's margins, mess up delivery timelines, and create significant earnings uncertainty.
Apple is down 12.3% since the beginning of the year, and at $213.80 per share, it is trading 17.5% below its 52-week high of $259.02 from December 2024. Investors who bought $1,000 worth of Apple’s shares 5 years ago would now be looking at an investment worth $1,877.
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