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Even during the good times, Magnificent Seven stocks hardly moved in lockstep. The tariff-induced market shake-up has made that even more evident, as vulnerable names — like Apple (AAPL) — struggle to gain traction without a clear path ahead.
But even as the prospect of a high-tariff regime — and a presidential threat — could deflate the company, the bull and bear cases largely look past the levies. Instead, they focus on the iPhone maker's established advantages and its long-held baggage.
The political environment has changed for Tim Cook; that's hard to deny. But for his Wall Street backers and detractors, the fundamental Apple story remains, both the good parts and the bad.
The bull case for Cupertino relies on its resilient earnings, a legacy built on underpromising and overdelivering. Executives have for years delivered stable results, seemingly perfecting the art of managing expectations. That may be especially hard to see now. As my colleague Josh Schafer reports, the Magnificent Seven combined for 62% of the S&P 500's advance in May, with all but one of the names outperforming the benchmark index's 6.2% gain. The sole laggard? You guessed it: Apple.
Ahead of the company's annual developers conference next week, Apple stock is down almost 20% for the year.
But bulls see the gap between Apple's performance and the broader market shrinking over time. Despite regulatory pressures and heightened competition, its stability and predictability hold advantages. As Bank of America analysts led by Wamsi Mohan wrote in a note this week, "Apple is seen as a defensive investment where even in challenging times, it meets or slightly beats consensus forecasts, and isn't prone to big guidance misses."
Apple's commitment to shareholder returns also underscores its dependability. Buybacks and dividends are to Apple investors what the company's ecosystem of gadgets is to its customers: a good reason to stick around.
As Mohan and his colleagues observe, Apple's aggressive buybacks act like a powerful buffer to protect earnings. By snatching back tens of billions of dollars worth of stock every year, Apple can still grow its EPS even if revenue stagnates. The scale of Apple's financial wizardry — and cash generation — is hard to replicate.
Bears, on the other hand, acknowledge Apple's enormity but see a lumbering giant past its prime.
