Apple (AAPL) made history last week as the first publicly traded company to reach a $3 trillion valuation.
AAPL: Daily Chart
The stock soared this year to jump above its previous all-time highs set in late 2021.
US tech stocks have been hot with investors this year on expectations for AI technology to boost revenue. Apple now has 2 billion active devices, and its most recent quarterly earnings beat analysts’ estimates, while the company continues to embark on large stock buybacks. Apple shares outperformed the Nasdaq during the first half of the year with a 45% return.
One headwind to further gains could be the company’s heavy weighting in tech indices. “If you’re an active manager, one of the issues is that it’s hard to own that much of one name. You are taking on more and more risk,” Todd Sohn at Strategas told Reuters.
“Because they are such heavyweights within the benchmarks, it becomes really challenging to outperform.”
Data showed that 418 US market funds held Apple, but only 26 had a greater weight in the company than its weight in the S&P 500. That may be affecting performance, with only 20% of actively managed mutual funds with US exposure being able to beat the S&P 500.
Greenwood Capital likes the company’s fundamentals, so “it’s not that we are rooting for it to go down,” the company CIO said. “We just think there are other names that have the opportunity to do better.”
Continued interest and momentum in the stock could provide some more upside for traders, but there is a pullback risk with each advance in the tech giant.
