Sell-off a ‘speed bump’ as iPhone super upgrade cycle looms

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“With 350 million of roughly 950 million iPhones worldwide currently in a window of an upgrade opportunity, Cupertino is roaring its engines ready to capitalise on this dynamic coupled by an AirPods franchise slated to sell 90 million this year (vs. 65 million last year).”

Mr Ives also said Apple remains our top 5G play and consumer tech recovery name as the lockdown eases and consumer spending looks to spike in the second half.

As for bets on cloud computing, Wedbush’s top bet over the next six to 12 months is Microsoft.

“For Redmond, this cloud shift and work from home dynamic looks here to stay and the company stands to be a major beneficiary of this trend on its flagship Azure/Office 365 franchise over the coming years.

“With 33 per cent of workloads on the cloud today poised to hit 55 per cent by 2022, we believe this WFH shift could clearly accelerate the cloud trend which plays right into MSFT’s wheelhouse.”

Overall on the tech sector, Mr Ives said the “pullback” is a buying opportunity.

Apple paced the losses among the mega techs in New York trade with a 8 per cent drop; Microsoft shed 6.2 per cent; Alphabet fell 5.1 per cent; Netflix lost 4.9 per cent; Amazon slid 4.6 per cent; Facebook dropped 3.8 per cent. Atlassian shed 5.4 per cent.

The NYSE FANG+ Index shed 6 per cent.

In after hours trading on Nasdaq, Apple was down a further – relatively modest – 1.4 per cent. Despite the drop, Apple’s market cap held above the $US2 trillion mark.

Apple has more than doubled from its March 23 lows. It has a one-year return of 137 per cent.

To be sure, the surge in tech valuations hasn’t been embraced by everyone.

“It’s possible that today’s market is an indication of things to come, where fundamentals play a larger part in valuations, as opposed to the irrational exuberance that has persisted in recent months within tech,” said Peter Essele, head of portfolio management for Commonwealth Financial Networt.

“The lack off a broad sell-off across all sectors shows that there’s a good deal of hot money chasing the large tech names, which can exit as quickly as it entered. Today’s rout was a rush to the exit for many of the momentum buyers.”

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