Apple shares are defying the tech market downturn, rising 2.6% on Tuesday and outperforming the broader market. This surge comes as investors seek safety amid concerns about the AI sector and a potential global rate sell-off. The tech giant's performance is particularly notable due to its inverse correlation with the Nasdaq-100 Index, a 7.5% component of the index. Apple's stock has not been this inversely correlated to its tech peers since 2005, according to CNBC analysis. This trend is further emphasized by the 30-day correlation reaching a low of negative 0.86, currently at -0.82, indicating a strong inverse relationship. In the past month, Apple shares have gained 7%, outpacing the Nasdaq-100's 1% gain.
This level of inverse correlation is unprecedented for Apple in recent years, with the only comparable period being the first quarter of 2024, when the company was in the midst of a sell-off as investors shifted towards AI disruptors. However, Apple's unique position in the market is attributed to its minimal exposure to the AI trade, as it was never heavily invested in the sector. Dave Mazza, CEO of Roundhill Investments, highlights this, stating, 'Apple doesn't sell off with the AI trade because it was never carrying that risk in the first place.'
The recent performance shift is significant, as Apple had been lagging the Nasdaq for the first six months of the year. However, it has now outperformed the index, with a 20% gain compared to the Nasdaq's 15%. Over the past three years, the two have been relatively even, with the Nasdaq up 90% and Apple up 82%.
Options traders are bullish on Apple's relative strength, with a high volume of calls traded on Tuesday, indicating a strong positive sentiment. The net delta exposure to underlying contracts is heavily imbalanced towards bullish positioning, further supporting the idea that Apple's performance is sustainable. This surge in Apple's stock is a notable development in the tech market, offering investors a safe haven amidst broader market volatility.
