The negative sentiment that has been blanketing the tech space isn’t going away anytime soon, noted Apple Inc. AAPL analyst Ming-Chi Kuo said on Tuesday.
What Happened: There seems no reason to be optimistic about all major tech sectors in 2023, Kuo said in a tweet. All major tech stocks are heading toward the worst, he said, citing his latest survey.
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Specifically, the analyst noted that Apple Inc. AAPL is tracking below consensus. Fundamentals of electric vehicles and servers aren’t solid as the market expects, he added.
His tweet quote-tweeted one of his own from March that said there isn’t any reason to be optimistic about the 2022 mobile phone market as order cuts have been rampant, from the highest-end Apple to the lowest-end brands. He had said then the industry is facing structural challenges.
Why It’s Important: The bulk of the negativity is due to factors extraneous to tech companies. Most consumer-facing tech companies are facing a demand slowdown as global economic growth flounders, increasing caution among consumers. Ad-dependent communications companies have also taken a hit due to the shrinking ad budgets of customers.
Most analysts brace for at least a mild recession in 2023 as an intransigent Fed is expected to continue with the rate hikes in the new year. The ongoing Ukraine war is expected to pose further challenges to growth going forward.
Tech companies are also be contending with production and supply chain challenges amid the COVID-19 situation in China, which is called the factory of the world.
The Technology Select Sector SPDR Fund XLK ended Monday’s session down 1.33% at $125.42, according to Benzinga Pro data.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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