What’s The Outlook Like For Apple Vendors’ Stocks?

Our Theme of Apple Component Supplier Stocks, which includes a diverse set of companies that supply components for Apple’s devices, has gained about 13% year-to-date, roughly in line with the S&P 500, although it has underperformed Apple stock (NASDAQ: AAPL), which has gained about 50% year-to-date. Now 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. The semiconductor supply crunch is also easing and this could be helping the companies in our theme to an extent. Separately, the launch of Apple’s new mixed-reality headset is also seen as a positive for the broader Apple ecosystem. Although we don’t see the device as moving the needle for Apple or suppliers in the near term, the high levels of engineering and software on the device do reinforce investor confidence that Apple is ahead of the curve when it comes to the next-generation of computing devices.

There are a couple of other factors that could benefit Apple suppliers in the near term. Apple’s next generation of iPhones, due this fall, is likely to sport more premium specifications and could sport higher prices, particularly for the Pro models. This could benefit suppliers to an extent. Moreover, the broader industry transition to 5G wireless networks is also likely to help Apple’s suppliers, who are largely focused on wireless chipsets and related semiconductors. For example, Android device vendors have been looking to equip more of their mid-range and lower-end models with 5G capabilities.

Within our theme, Jabil stock (JBL) has been the strongest performer, rising by about 55% year-to-date. On the other side, Texas Instruments has been one of the weaker performers with its stock up by just about 7% year-to-date.

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[1] Month-to-date and year-to-date as of 6/30/2023
[2] Cumulative total returns since the end of 2016