Apple Stock Rises On Limited Tariff Relief. Uncertainty Remains.
PATRICK SEITZ
Apple (AAPL) stock rose Monday on news that smartphones, laptops and other electronics had received an exemption from U.S. reciprocal tariffs. But the Trump administration described the exemption as temporary.
Late Friday, the White House announced that smartphones, PCs, servers, flat-panel displays, hard drives, networking gear and other products are exempt from the 125% reciprocal tariff on Chinese goods and 10% baseline levy on imports from other countries. However, electronics products still face a 20% tariff on Chinese goods imposed earlier this year.
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On Sunday, Commerce Secretary Howard Lutnick said the reprieve is temporary. And President Donald Trump echoed that statement.
In morning trades on the stock market today, Apple stock rose more than 4% to 206.67. Other stocks moving higher on the news included computer makers Dell Technologies (DELL), HP (HPQ) and Super Micro Computer (SMCI).
KeyBanc Capital Markets analyst Brandon Nispel raised his rating on Apple stock to sector weight, or neutral, from underweight, or sell. He kept his price target at 170.
The Trump tariff exemption "takes a big risk off the table," he said in a client note Sunday. "However, we don't think Apple is 'out-of-the-woods' yet."
Growth expectations for Apple remain too high, given a likely pullback in consumer spending, he said. Plus, "Apple's thus-far failed approach to AI remains a question," Nispel said.
Apple also faces negative implications from the pending Department of Justice lawsuit against Alphabet's (GOOGL) Google, he said.
Apple Stock Gets Price-Target Cut
Elsewhere on Wall Street, JPMorgan analyst Samik Chatterjee lowered his price target on Apple stock to 245 from 270 but kept his overweight, or buy, rating.
The Trump administration's latest tariff moves are a "big relief" for Apple, he said in a client note Monday. However, he sees Apple impacted by lower demand from a macroeconomic slowdown. Also, Apple faces potential further downside risk on the resumption of tariffs.
In addition, not all Apple products are exempt from the stepped-up tariffs, Chatterjee said. "At this time, based on the exemptions announced on Friday, we believe iPhones, Macs and iPads are exempt while AirPods and Apple Watch are not," he said.
Needham analyst Laura Martin said the Trump's rollback of reciprocal tariffs was good news for Apple. She estimates that more than 80% of Apple's products are manufactured in China.
"We expect Apple to continue to diversify its manufacturing out of China over the next 3-5 years, including some to the U.S., in order to lower its dependence on China," she said in a client note Monday. "Too much of its value is dependent on a single economy, China. This adds risks to its core business — iPhone sales."
Trump's Tariff 'Flip-Flop'
Mizuho Securities trading-desk analyst Jordan Klein described the Trump rollback of tariffs on electronics a "flip-flop."
"The cadence of tariff news flow on planned changes related to China over the past three days proves to me how disorganized and disjointed this administration has become," Klein said in a client note Monday. "This all seems so after-the-fact and make-it up-as-they-go-along."
The frequent changes to the Trump tariffs make it difficult for companies to plan and for investors to decide what stocks to buy and sell, he said.
Follow Patrick Seitz on X, formerly Twitter, at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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