Stock Movers: Home Depot, Tech Downgrades, Apple (Podcast)

Home Depot cut its full-year guidance, flagging a roughly 5% decline in adjusted EPS and weaker-than-expected profit and comparable sales as an unsettled consumer and a lack of storm-driven demand hurt big-ticket home purchases such as roofing and generators, a signal of pressure for housing-exposed retail. Separately, Rothschild & Co Redburn analyst Alexander Haissl downgraded Microsoft and Amazon amid a broader Nasdaq 100 selloff that has erased about $1.8 trillion since late October and growing investor concern over stretched AI-related valuations. By contrast, Apple gained momentum after Counterpoint data showed iPhone 17-driven monthly China sales rose 37% and iPhones captured 25% of October smartphone sales—the highest share since 2022—supporting management’s view that China revenue could return to growth this quarter.

Analysis

Home Depot cut its full-year guidance and now expects adjusted EPS to decline about 5% year-over-year after profit and comparable sales missed expectations; management cited an unsettled consumer for big-ticket home purchases and an absence of storms that reduced demand in categories such as roofing and generators. These specifics point to near-term margin and top-line pressure for housing-exposed retail and increase the risk that the company will underperform discretionary peers while housing demand remains weak.

Rothschild & Co Redburn analyst Alexander Haissl downgraded Microsoft and Amazon for the first time since initiating coverage in June 2022, a move that follows a Nasdaq 100 selloff that has erased roughly $1.8 trillion and sent the index down 5.1% since late October; the report cites investor retreat from AI-related names amid valuation concerns. The combination of analyst downgrades and market-wide tech weakness increases downside beta and short-term volatility for large-cap tech exposure.

Apple showed a clear positive outlier as iPhone 17-driven monthly China sales rose 37% and iPhones captured 25% of October smartphone sales—the highest share since 2022—bolstering management’s call for China growth to return this quarter. That divergence implies sector dispersion: idiosyncratic, product-driven upside for Apple versus macro- and sentiment-driven downside for housing and AI-exposed tech names.

Key Decisions for Investors

• Reduce or hedge exposure to housing-exposed retailers such as Home Depot following its guidance cut (adjusted EPS down ~5%) and weaker comps, and wait for stabilization in comparable sales or clearer storm-demand normalization before adding risk
• Exercise tactical caution on large-cap AI-exposed names like Microsoft and Amazon after Rothschild/Redburn downgrades and the Nasdaq 100's ~5.1% drawdown (~$1.8tn lost); reassess valuation sensitivity and trim concentrated positions or add downside protection
• Consider selectively increasing exposure to Apple on the strength of a 37% month-over-month rise in China iPhone sales and a 25% October market share supporting near-term China revenue growth, but limit position size until repeat monthly data or guidance confirm sustainability
• Employ portfolio-level hedges (index puts, tail-risk protection) and monitor short-term indicators—monthly China handset data, next-quarter comps and EPS at Home Depot, and analyst revision activity in tech—to time re-entry or position adjustments