Key Takeaways:
- Apple shares fell more than 5% in extended trading after its quarterly report.
- The decline came as the broader tech sector rallied on Microsoft's strong results.
- Investors await details on iPhone demand and the company's AI strategy.
Back
Apple slides 5% after hours as quarterly results disappoint
Apple Inc. shares slid more than 5% in after-hours trading Wednesday after the company reported quarterly results, bucking a broader tech rally driven by Microsoft Corp.'s strong earnings.
"The concern is no longer just how much these companies are spending — it's that higher rates may not deter them from spending more, because they see the AI buildout as a competitive necessity," Anna Rathbun, CEO and founder of Grenadilla Advisory, said.
The decline came as the Nasdaq Composite gained 2.2% during regular trading, with the Philadelphia chips index up 6.7% and snapping a five-day losing streak. Microsoft jumped about 15% after forecasting current-quarter sales and cloud growth above expectations, with Bank of America reiterating a buy rating and calling the results "increasing validation of Microsoft's AI strategy." Meta Platforms fell nearly 9% after reporting a 91% drop in second-quarter free cash flow, underscoring the financial strain of its AI buildout.
The US economy grew at a 1.5% annualized rate in the second quarter, below the 1.8% consensus, while core PCE inflation rose 3.3% from a year earlier. The Federal Reserve held interest rates steady in the 3.50% to 3.75% range, with Chair Kevin Warsh facing a 9-3 vote split and criticism over unclear forward guidance. Traders now see a 57% chance of a 25-basis-point rate hike at the September meeting, according to LSEG-compiled data.
Apple's after-hours selloff signals investor disappointment with the results. The company's earnings call later Wednesday will provide details on iPhone sales, services revenue, and the trajectory of its AI investments.
The decline puts Apple's market capitalization at risk of a significant drop at Thursday's open. Investors will watch for any changes to the company's guidance and commentary on demand trends in key markets including China, where the company has faced increasing competition from local smartphone makers.
This article is for informational purposes only and does not constitute investment advice.
