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Peter Davis

An writer at FOMOdrive

  • Sep 14, 2023
  • 2 min read

Will Apple's stock collapse end the US bigtech rally?

Apple shares have plummeted due to the increased restrictions on iPhones in China.

For the first time in 11 weeks, tech stocks are being sold by investors.

A guru of financial analysis has declared that US big tech stocks are overvalued.

Apple's capitalization dropped by a staggering $200 billion over the course of two days on Wednesday and Thursday, due to restrictions on the use of the iPhone in China. This was the largest two-day decline since November of last year. On Friday, the stocks rose slightly, but still ended the week with a loss of more than 5%.

According to The Wall Street Journal, Chinese authorities have prohibited personnel at central government agencies from using iPhones and other foreign-brand devices.

On Thursday, Bloomberg clarified that the ban could be extended to encompass all state-owned enterprises and other organizations that are supported by the government.

Chinese authorities have warned of potential risks to national security posed by civil servants utilizing Apple technology.

Apple's revenue is largely dependent on the Chinese market, which accounts for nearly 20% of total sales. The iPhone is the company's most profitable product, making up 52% of Apple's total revenue.

Morgan Stanley has forecasted that Apple's revenues this year could be reduced by 4% as a result of the Chinese government's restrictions on the use of iPhones by its employees.

Reuters reported that U.S. lawmakers have expressed concern over Beijing's tightening of restrictions on iPhones, which could have a negative impact on U.S. tech companies that are heavily reliant on China. This has caused fears that the increasing tensions between the two countries could lead to further difficulties.

For the first time in 11 weeks, Bank of America reported that technology stocks experienced outflows in the week prior to September 6. This could be an indication that investors are beginning to become skeptical of the AI craze.

Professor Aswath Damodaran of New York University's Stern School of Business has warned that big tech stocks are overvalued and will not continue to increase in value this year. However, he believes that the overall market may still experience growth until the end of the year. Damodaran is a renowned author of several books on the evaluation of investment assets.

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