Why Apple Remains a Big Bet for T. Rowe Price’s Science & Technology Equity Strategy Amid US-China Tariffs
In a recent interview, Tony Wang, the manager of T. Rowe Price’s Science & Technology Equity Strategy portfolio, shared insights into why Apple (AAPL) continues to be the portfolio’s biggest holding, despite the ongoing US-China tariffs.
Apple’s Resilience Amid Trade Tensions
Wang acknowledged the impact of tariffs on Apple’s supply chain. However, he also highlighted the company’s ability to adapt and innovate, which keeps it at the forefront of the technology sector.
“Apple has a proven track record of managing its supply chain effectively, even in challenging geopolitical environments,” Wang said.
Diversified Revenue Streams
One of the reasons for Apple’s resilience is its diversified revenue streams. While some of its products, like the iPhone, are manufactured in China, the company’s services segment, which includes the App Store, iCloud, and Apple Music, is not significantly affected by tariffs.
- Services revenue accounted for 16.3% of Apple’s total revenue in Q3 2020, up from 14.5% in the same quarter a year ago.
- Apple’s Services segment grew 16.3% year-over-year in Q3 2020, outpacing the company’s overall revenue growth of 5.5%.
Innovation and Market Leadership
Another reason for Apple’s continued growth is its innovation and market leadership. The company’s latest products, such as the iPhone 12 and the M1-powered Macs, have received positive reviews and strong sales.
“Apple continues to innovate and lead the market in key areas, such as 5G technology and artificial intelligence,” Wang noted.
Impact on Consumers and the World
The ongoing US-China trade tensions could have implications for consumers and the world at large. While Apple’s resilience is a positive sign, other companies that are more reliant on China for manufacturing could face challenges.
“The tariffs could lead to higher prices for consumers, as companies pass on the additional costs to their customers,” Wang warned.
Moreover, the trade tensions could impact global economic growth, as uncertainty and instability in the business environment could discourage investment and innovation.
Conclusion
Despite the ongoing US-China tariffs, Apple remains a strong bet for T. Rowe Price’s Science & Technology Equity Strategy portfolio. The company’s ability to adapt and innovate, combined with its diversified revenue streams and market leadership, make it a resilient player in the technology sector.
“Apple’s success is a reminder that in an uncertain world, companies that can innovate and adapt are best positioned to thrive,” Wang concluded.
As consumers, we can continue to benefit from Apple’s innovative products and services. However, we should also be aware of the potential implications of trade tensions on the businesses we invest in and the global economy as a whole.
