The higher the magnificent seven stocks rose, the greater the risk they would attract negative developments.
After markets worried about Apple (AAPL) losing market share to Huawei’s Mate Pro in China, the Department of Justice added another concern. It filed a civil suit on Mar. 21, 2024, against Apple. It accused Apple of anti-competitive tactics, alleging the firm of creating barriers. This made it extremely difficult for developers to go outside the Apple operating system.
Apple has several strong defensive approaches. First, Google Android is a dominant smartphone operating system, too. Software developers who do not want to play in Apple’s garden may simply build apps for Android. Second, Apple’s phone OS is highly secure. It cannot open everything up without exposing potential security risks to its users.
The DOJ case may hurt the Biden Administration as the election looms in November. Apple may increase app prices, licensing fees, or device costs to offset the added legal costs. Additionally, it may anticipate paying a large fine to the DOJ to settle the case. Apple customers would need to pay for that.
Apple stock is a hold. Markets dislike uncertainty. This would drive down AAPL stock prices. At lower prices, value investors, including Berkshire Hathaway’s Warren Buffett, may increase their position at a discount.
