Microsoft and Apple’s valuations are holding up partly because they are less vulnerable to competitors. The trouble is they are now premium compared to historical prices, and their buffers aren’t unassailable, says rob_cyran.
Investors have fewer worries when it comes to Microsoft and Apple. With Apple’s first quarter market share of North American mobile phone shipments exceeding 50%, according to Canalys, it is increasingly inconceivable to think that users will ditch their iPhones. And it’s credible to think the $2.5 trillion company’s Chief Executive Tim Cook will have success selling more advertising and financial services to its customers.
The buffers for the latter two companies are assailable. Rivals still want to steal customers, antitrust regulators can’t be dismissed entirely, and the biggest threat – these firms miss out on a market shift as tech advances – remains. While moats protect against rivals, they may do little against a recessionary wave that smashes earnings in the sector overall. Technology investors may be right on their assessment, but wrong on the way they are valuing it.
Apple is scheduled to release quarterly results on the afternoon of July 28. The company is expected to have earned $1.16 per share, compared to $1.30 a year ago.Editing by Lauren Silva Laughlin and Amanda Gomez