Why Shares of Apple Are Surging Today
Earlier this week, Apple announced a $600 billion investment in the U.S.
That seemed to lower tensions between the company and President Donald Trump.
One Wall Street analyst views the event as positive and raised his price target on the stock.
10 stocks we like better than Apple ›
Shares of Apple (NASDAQ: AAPL) traded nearly 4.3% higher as of 2:35 p.m. ET today. Analysts are more optimistic that the company has squashed some of the tariff drama with President Donald Trump's administration.
Investing $600 billion in America will pay off for shareholders
Many large tech companies have been in the crosshairs of the Trump administration, which seeks to bring more manufacturing back to the U.S. Trump recently announced that he would slap a 100% tariff on semiconductor imports unless companies are building or investing in the U.S.
Earlier this week, Apple, which is one of the hardest-hit large tech companies by tariffs, announced a $600 billion U.S. investment. While it sounds costly, it's the better alternative to higher tariffs, Melius Research analyst Ben Reitzes wrote in a note today. Reitzes also reiterated a buy rating on the stock and raised his price target by $20 to $260.
"It relieves Apple from paying incremental tariffs on U.S.-bound iPhones from India," Reitzes said, adding that a stronger iPhone production cycle could begin in the fall. "We are going to take a risk here and raise our target and our numbers, taking out a huge portion of our tariff hits."
One problem potentially solved
Apple's stock has struggled this year because of how much of the company's production is abroad in China, India, and Vietnam. Even after the big run this week, shares are still down about 5.5% on the year.
The company has also struggled to convince investors that it has a strong road map in place for artificial intelligence. While that challenge remains, removing some of the tariff overhang is certainly a big step in the right direction and allows the company to focus more on its core business.
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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Apple. The Motley Fool has a disclosure policy.
Why Shares of Apple Are Surging Today was originally published by The Motley Fool
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