It’s going to be a tough day for technology stocks on Thursday after Apple warned first quarter sales would be less than it previously expected.
The Invesco QQQ Trust, which track the tech heavy Nasdaq-100 Index, lost 1.96 percent in after hours trading on Wednesday. Apple shares cratered by 7 percent. The S&P 500 ETF Trust, tracking the broader market, lost 0.9 percent in extended trading.
Apple said it sees first quarter revenue of $84 billion vs. a previous guidance of a range of $89 billion and $93 billion. Analysts expected revenue of $91.3 billion for the period, according to the consensus estimate from FactSet. Apple blamed most of the revenue shortfall for struggling business in China. But the company also said that upgrades by customers in other countries were “not as strong as we thought they would be.”
Chip stocks Advanced Micro Devices, Nvidia, Skyworks and Qorvo all dropped in after hours trading on the Apple warning. Best Buy lost 2 percent. Skyworks lost more than 5 percent.
“If you look at our results, our shortfall is over 100 percent from iPhone and it’s primarily in greater China,” Apple CEO Tim Cook told CNBC’s Josh Lipton in an interview Wednesday. “It’s clear that the economy began to slow there in the second half and I believe the trade tensions between the United States and China put additional pressure on their economy.”
This shouldn’t be a total surprise for investors, who punished tech stocks in the fourth quarter on fears that Apple’s business was struggling, especially in China. A number of analysts had come out and cut their estimates and price target on Apple last quarter. Apple dropped 30 percent in the final three months of 2018. The technology portion of the S&P 500 lost more than 17 percent.
This is a developing story. Check back for updates.
