For almost the entire year, Apple Inc. (NASDAQ: AAPL) was the best performing of the 30 components of the Dow Jones Industrial Average. That changed recently as Apple’s share price retreated and it was passed by Boeing Co. (NYSE: BA), which became the best performing Dow stock for the first half of 2017.
Boeing’s shares rose 27% in the first half to $197.75. Apple’s closed the period higher by 24% to $144.02. The Dow rose 8% to 21,349.63.
Boeing’s shares surged late in the first half on optimism about sales of its lineup of commercial jets. It recently posted strong results at the annual Paris Air Show and, by most measures, bested its archrival Airbus in the process. Boeing added about $40 billion new orders over the course of the event. Boeing’s own annual 20-year forecast for the industry was bullish:
Over the next 20 years, Boeing is forecasting a need for over 39,600 airplanes valued at more than $5.9 trillion. Aviation is becoming more diverse, with approximately 38 percent of all new airplanes being delivered to airlines based in the Asia region. An additional 40 percent will be delivered to airlines in Europe and North America, with the remaining 22 percent to be delivered to the Middle East, Latin America, the Commonwealth of Independent States, and Africa.
Apple, on the other hand, has been victim both of a sell-off of large tech stocks and anxiety about its own future. As with other mega cap companies Alphabet, Facebook and Amazon, investors in large numbers have started to question whether the dominance of Apple in its own segment is enough for the huge run up in its valuation. None of these companies has forecast sharp accelerations in earnings this year, at least beyond that posted in the most recent quarters.
Apple also faces a slew of questions about the new iPhone 8. Because iPhone sales are such a large part of Apple’s total revenue, investors see any bet on the stock’s success as a bet on record iPhone 8 sales. Even a modest slip could destroy positive sentiment.
What could put Apple back into the top spot? iPhone 8 success. Period.