Apple Inc (NASDAQ:AAPL) stock remains one of the few underperforming names within the Magnificent Seven group, falling 11.6% year-to-date. For comparison, the tech-heavy Nasdaq 100 index rose 6.4% during this period, driven by strong gains in AI-driven giants like Nvidia (NASDAQ:NVDA) and Microsoft (NASDAQ:MSFT).
Why is Apple stock so weak?
Apple’s lackluster performance in 2024 can be attributed to several key drivers, including weak iPhone sales in China, fears it is falling behind in the AI arms race, and setbacks in the courtroom related to its App Store monopoly.
However, despite all these headwinds, there may be one overriding factor that is driving the negative sentiment in Apple stock this year – worries Warren Buffett is selling down his Apple stake.
Warren Buffett’s Berkshire Hathaway Apple stake
Last month, Berkshire Hathaway (NYSE:BRKa), the investment giant founded and led by Warren Buffet, revealed that it has reduced its significant stake in Apple stock.
In particular, the conglomerate said in a filing it has offloaded 10 million Apple shares in the fourth quarter. Despite that, Berkshire is still one of Apple’s biggest stockholders, owning over 905 million of the iPhone maker’s shares.
Nonetheless, the move sparked broader concerns among investors, who are worried about what will happen to AAPL sentiment and its stock price if Buffett, one of the company’s loudest proponents, is trimming down his massive stake.
What analysts are saying about Buffett’s Apple stake?
Responding to these questions, a Mizuho desk analyst noted that Buffett selling off more of his Apple stock would be no good for the technology behemoth’s share price.
“My guess is the stock gets slaughtered,” the analyst wrote.
“Retail investors are in a panic as stock down almost every day since a Jan 23rd high at $195. Few active managers are overweight, but Uncle Warren is the 3rd largest shareholder (and biggest non ETF holder) with near 6% stake, or 905M shares,” he added.
Buffett has made a significant profit on his AAPL investment, the analyst observed, and considering it's one of his largest, if not the largest, single equity holdings, and given the challenges it faces, deciding to sell it sooner or later would be no surprise.
“I would not be surprised if he is selling right now. He knows when that 13F comes out showing he started to sell, that AAPL shares will get killed as retail investors rush for the exit.”
Apple's recent headwinds, including waning iPhone demand, disappointing Vision Pro feedback, and concerns about its AI strategy have all contributed to its dull performance this year.
Consequently, some are worried that Apple stock has become a fund source for investors to pivot their investments into frontrunners in the ongoing AI boom, such as Nvidia, Microsoft, and Meta (NASDAQ:META), among others.