Apple: A Contrarian Buy Opportunity (Rating Upgrade)

Summary

• Apple stock dropped 19% in the last 3 trading days, the worst performer in the Magnificent 7, suggesting it has priced in some negative impacts from Reciprocal Tariffs.
• The company is unlikely to move all manufacturing back to the U.S., expecting higher product prices if tariffs persist, but this won't significantly impact its long-term growth outlook.
• After the selloff, the stock's valuation has become more attractive, with its non-GAAP P/E fwd 10% below the 5-year average and in deep oversold territory.
• As the largest company in major indexes, AAPL's demand can be supported by the market in the short term.
• My base case is that Trump will partially roll back tariffs following constructive negotiations or if the market continues to sell off as recession risks materialize, creating a strong upside surprise for the stock.

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What Happened

Apple Inc.'s (NASDAQ:AAPL) stock recently suffered from the worst selloff compared to other "Magnificent 7" names, down 19% over just three trading sessions. I'm not surprised by the magnitude of the pullback, due to its premium

Analyst’s Disclosure:I/we have a beneficial long position in the shares of AAPL either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.