Are retail investors trying to tell us something about Apple?

• Apple has been falling out of favor with retail investors.

• Over Thanksgiving week, it was the only member of the Magnificent 7 to see retail selling.

• Day traders have actually been offloading it all year.

As an avid Apple Music user, I felt left out on Spotify Wrapped Day earlier this week. Most of my Spotify-using friends and coworkers gleefully swapped musical tastes all day long as I sat on the outside.

“But Apple has an intuitive interface and superior audio quality,” I mumbled into my coffee, to no one in particular.

As it turns out, retail investors have been similarly treating Apple like an afterthought. During the shortened Thanksgiving week, they piled into every Magnificent 7 stock but Apple, pulling $96 million out, according to JPMorgan data. (For context, Nvidia led inflows with $650 million.)

What’s more, JPMorgan found that day traders have been consistent sellers of Apple throughout the year. This matches data from Schwab showing that its clients were net sellers of Apple during the third quarter.

The reason is relatively straightforward to anyone who’s followed the AI race this year: Apple is behind — or at least that’s the perception investors have.

While fellow contestants Nvidia, Microsoft, and Meta loudly pile tens of billions of dollars into AI and ink huge deals with one another, Apple has been its typically quiet self.

The secrecy and painstaking caution that helped the company create and mass-manufacture some of the world’s most ubiquitous consumer products is now viewed as a drawback. Apple’s competitors are growing more aggressive, and it’s struggling to match that energy.

Reflective of cooling retail interest is middling stock performance for Apple, especially by its high standards. It’s up 12% year to date, trailing the S&P 500 by almost five percentage points. This is a company that’s exceeded a 30% annual return in five of the last six years!

And it’s not just retail investors getting cold feet about Apple. Berkshire Hathaway has trimmed its holding in the company by two-thirds from its peak position (although the stock remains Berkshire’s top holding by value). Viking Global went as far as to offload its entire stake in the fourth quarter of last year.

As for how it’s going at Apple right now, it’s hard to ignore the exit of the company’s AI chief. Sure, there’s a talent war raging in the industry, but Apple has more cash on hand than most small nations. If it wanted to pay up to keep key people, it could.

It also doesn’t help that criticism is coming from high places. A co-creator of the tech behind Siri recently said it was a misstep to make the AI agent voice-only.

Still, I’d stop short of breaking out the violins for Apple. It remains an undeniable juggernaut.

But it does have newly resurgent Alphabet nipping at its heels, and Microsoft isn’t far behind. It could soon lose its spot as the second-most-valuable company.

Ultimately, there’s a difference between being a mega-profitable behemoth and also having your stock price trounce peers and go straight up forever. Apple eventually might have to settle for the former.

Read the original article on Business Insider