As the iPhone maker Apple Inc. AAPL announced its plans to invest $500 billion in the U.S. over the next four years, this expert says that the technology giant was “forced to kiss the ring,” in his latest post.
What Happened: President Donald Trump at a meeting with the U.S. governors over the weekend announced that Apple’s CEO, Tim Cook would be making a huge investment in America. Following this Apple announced via a press release on Monday morning its investment plans.
Craig Shapiro, the macro strategist at the Bear Traps Report said that this was great for the country in the long term. However, he asked if the company would “trade at the same multiples,” and if it was being forced into state-imposed “capitalism”.
He further questioned if all the firms would be required to have a meeting with Trump before they make their “capex and hiring decisions”.
Why It Matters: According to Apple’s press release with the $500 billion, it plans to manufacture a new server factory in Texas. It aims to double the U.S. Advanced Manufacturing Fund, including silicon production in Arizona and intends to start a manufacturing academy in Michigan.
The iPhone maker also plans to spend on research and development with accelerated investments in AI and silicon engineering nationwide. It wants to expand data centers in North Carolina, Iowa, Oregon, Arizona, and Nevada. Furthermore, it aims to expand its teams and facilities in Michigan, Texas, California, Arizona, Nevada, Iowa, Oregon, North Carolina, and Washington.
Shapiro in an earlier hypothesis also pointed out that Trump was acting like a “Mafia Don“. He said that the President was making everyone “kiss the ring” in order to get advantageous treatment from the U.S. government with respect to tax treatment, tariffs, investment subsidies, mergers approval, etc.
His “Mafia Don” metaphor highlights how Trump’s unpredictable control creates a climate where businesses must wait for approval before moving forward. He said many are left questioning whether investing now is worth the risk. However, the company with the largest market capitalization in the world, Apple became one of the first companies to make huge investment announcements in the U.S.
Price Action: Apple fell 0.70% in premarket on Friday, contrasting with a 0.44% advance in the Invesco QQQ Trust, Series 1 QQQ, which tracks the Nasdaq 100 index.
AAPL remains higher by 0.70% on a year-to-date basis and 35.54% over a year.
Benzinga tracks 30 analysts with an average price target of $247.5 for the stock, reflecting a “buy” rating. Estimates range widely from $188 to $325. Recent ratings from Citigroup, Needham, and Morgan Stanley average $270, suggesting a potential 11.11% upside.
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