Is Apple indeed immune to a recession?

There’s no evidence to show beyond a doubt that Apple Inc (NASDAQ: AAPL), indeed, is a recession-proof stock, says Toni Sacconaghi. He’s a Senior Research Analyst at Bernstein.

Apple had a strong Q3

Investors have been treating the multinational as a hedge against an economic downturn ever since it reported strong results for its fiscal third quarter.

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They were surprisingly confident about their business going forward and many investors feel, okay, we may have economic weakness going forward but Apple is perhaps immune to that given its franchise strength.

Apple shares have bounced roughly 30% off their low in mid-June as management remains convinced the iPhone sales are unlikely to take a hit. Apple has ordered suppliers to make just as many devices this year as they did in 2021.

Wall Street currently has a consensus “overweight” rating on the stock as well.

Sacconaghi pushes back on the notion

But Sacconaghi says these claims are premature until we see how the iPhone 14 does in terms of sales.

Apple has had two consecutive years of strong sales as work-from-home and stimulus checks translated to higher demand. But now that the real income is taking a hit, the iPhone 14 will be put to a test following its release in September. On CNBC’s “Squawk Box”, Sacconaghi said:

The question is, how do consumers respond to the iPhone 14. The real driver of Apple’s economics are iPhone sales. That’s a proactive choice. If they upgrade at a lower rate going forward, that will materially impact Apple.

As of August, the U.S. economy is in a “technical” recession after two consecutive quarters of negative GDP.