Short-Term Stumbles

When Apple and Nvidia go, so does the Nasdaq.

That’s why tech shares have been relatively impotent the past few weeks as Apple, again, revealed they don’t have much more than the iPhone.

This has spooked tech shares.

Combine the lack of innovation from Apple with the scares of Nvidia not being able to sell their chips in China as Washington clamps down on China’s ability to procure semiconductor products, and there you have it.

Growth fears from the biggest and best tech companies mean that as a sector, the Nasdaq shares pull back and investors are feeling the pain.

Apple is experiencing a slowdown in the smartphone market, but will the presumed iPhone 15 release in September change that for Apple?

NVDA shares surged by over 200% year-to-date in 2023 and replicating that for the back half of the year is almost impossible.

A continued drop in Apple’s overall revenue suggests that investors demand Apple to pull another cat out of the hat and at some point find something new.

A bout of inertia from management could force investors to look elsewhere with their capital allocation strategy.

Services did have a good quarter, but moving forward, what is their grand plan?

What does that mean then for this quarter as well as the next quarter, when we get the presumed iPhone 15?

It's something that Apple is going to have to answer once those phones are revealed in September.

They're going to have to have stellar features and not just the same groundhog day with a different color lock screen.

New cameras, new processor, basically looks the same. So can Apple really push the envelope enough to get people back into stores, back online, and picking up their products?

Take what I just said about the iPhone and apply it to the iPad and the Mac businesses too.

It is an industry-wide trend where people bought their PCs or laptops during the government-mandated lockdowns.

Now they just don't need another new one. And so we're seeing that from manufacturers to chip makers as well.

Beyond Apple, what about Nvidia?

There was a massive run-up on NVDA shares throughout the year. And now the question is, can they keep it rolling?

NVIDIA is a unique company when it comes to the AI space. They produce chips that nobody else can. They've perfected this over decades. They made the bet several years ago, and now it's really paying off for them.

Also, what happens when companies, this kind of hyperscaler companies, go out and begin putting their own chips into their own servers?

We know that Microsoft is working on it, Google is working on it, Amazon's working on it; Tesla has their own supercomputer that they're building with their own chips.

They already use NVIDIA as well and Elon Musk had said, look, we'll order as many as we can.  

I don’t believe that will bite Nvidia in the short term, but it’s definitely a long-term risk.

As long as Nvidia produces the quality required to stay ahead of the competition, the stock market will pick back up after it has time to digest the rally in the first half of the year.

Ultimately, these are great companies, but faster than we know it, solutions are demanded for structural problems.