{"id":13114,"date":"2024-04-17T15:34:07","date_gmt":"2024-04-17T15:34:07","guid":{"rendered":"https:\/\/zacksim.com\/blog\/?p=13114"},"modified":"2024-04-17T15:34:08","modified_gmt":"2024-04-17T15:34:08","slug":"apples-antitrust-lawsuit-and-the-regulation-of-tech","status":"publish","type":"post","link":"https:\/\/zacksim.com\/blog\/apples-antitrust-lawsuit-and-the-regulation-of-tech\/","title":{"rendered":"Apple’s Antitrust Lawsuit And The Regulation Of Tech"},"content":{"rendered":"\n

Joey K. from Hershey, PA asks:<\/em> Hello Mitch, do you think the recent antitrust lawsuit against Apple is a big deal for the Tech industry at large? What are your views on the Technology sector at the moment?<\/p>\n\n\n\n

Mitch\u2019s Response:<\/strong><\/p>\n\n\n\n

Thanks for writing, Joey. The first point I need to make is that I don\u2019t write about individual stocks in this column or others, so any mention of Apple or other companies should not be construed as a recommendation.<\/p>\n\n\n\n

For readers who aren\u2019t aware, late last month the U.S. Justice Department sued Apple, accusing the company of monopolizing smartphone markets. Apple has been the subject of anti-competitive lawsuits before and has generally prevailed. A few years ago, Epic Games lost a lawsuit against Apple alleging the company of a monopoly over mobile games, which arguably means the Justice Department has a tall mountain to climb.1<\/sup><\/p>\n\n\n\n

In the realm of tech regulation, I would also add that overseas, the European Union began enforcement of the Digital Markets Act on major tech companies, which is likely to raise costs in the form of adjusted business practices, strategies, and compliance. So, I think it\u2019s fair to say that regulatory headwinds are growing globally.<\/p>\n\n\n\n

Turn Market Volatility into an Opportunity \u2013 Here\u2019s How<\/a><\/span><\/strong><\/p>\n\n\n\n

Considering these regulatory challenges, it’s crucial to remember that market turbulence is a normal part of investing. Dealing with sudden ups and downs can be challenging, but there are positive aspects to volatility.<\/p>\n\n\n\n

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It covers:<\/p>\n\n\n\n

\u2022 How market volatility can \u201cshake up\u201d complacent investors
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But in my view\u2014and to answer your question\u2014these legal fights and forced adjustments to business practices are likely to stretch out over many years, and may result in some level of drag on earnings. But the bigger risk is that a major company is forced to be broken up, or that regulations target major revenue sources. In my view, neither of these latter outcomes seems likely, even as the appetite for regulation is high and rising.<\/p>\n\n\n\n

Technology continues to be a dominant performer from a sector standpoint in the U.S., which has many wondering if \u2018euphoria\u2019 is starting to come into play. Indeed, investors can easily get over-excited about innovations in technology, especially ones with the promise to reshape the entire economy. Readers remember the 2000 tech bubble.<\/p>\n\n\n\n

What\u2019s different about today, however, is that the game-changing innovations\u2014namely generative artificial intelligence and machine learning that many are excited about\u2014are already generating massive profits for companies producing the chips, servers, and infrastructure needed to power this nascent technology. Major AI suppliers and beneficiaries alike are seeing incredibly strong free cash flow margins, outpacing every other sector\u2019s net margins.<\/p>\n\n\n\n

Another key is that unlike 1999 (and 2020), unprofitable tech companies are not seeing the same kind of valuation surge that accompanied more speculative technology bull markets of the past. While many of the highest-quality tech company valuations are back up near the 2020\/2021 highs, investors are favoring companies with strong and rising earnings\u2014signaling a \u2018healthier\u2019 rally in the sector that I think can be sustained as long as profits are being generated at this pace.<\/p>\n\n\n\n

Building on this theme of a ‘healthier’ rally, it’s worth diving deeper into how you can navigate and potentially benefit from market volatility. To provide insight into some of these positives, I’m offering all readers our guide “Using Market Volatility to Your Advantage3<\/sup><\/a><\/em><\/span><\/strong>“. This guide shares insights from our decades of experience and can help you understand how a volatile market can actually refine your strategies and potentially lead to solid returns over time.<\/p>\n\n\n\n

It covers:<\/p>\n\n\n\n

\u2022 How market volatility can \u201cshake up\u201d complacent investors
\u2022 Potential bargains that may be uncovered through turbulence
\u2022 Why volatility may help prevent overheating and market \u201cbubbles\u201d
\u2022 What history shows us about opportunities for steady investors in turbulent markets
\u2022 Plus, more ways you may be able to benefit from a volatile market<\/p>\n\n\n\n

If you have $500,000 or more to invest, download this free guide today by clicking on the link below.<\/p>\n","protected":false},"excerpt":{"rendered":"

This week, Mitch looks at the high and rising appetite for regulation of technology companies, and how that could impact prospects for this sector.<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[66,71],"tags":[],"class_list":["post-13114","post","type-post","status-publish","format-standard","hentry","category-mitchs-mailbox","category-private-client-group"],"acf":[],"_links":{"self":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13114","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/comments?post=13114"}],"version-history":[{"count":2,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13114\/revisions"}],"predecessor-version":[{"id":13116,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/posts\/13114\/revisions\/13116"}],"wp:attachment":[{"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/media?parent=13114"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/categories?post=13114"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/zacksim.com\/blog\/wp-json\/wp\/v2\/tags?post=13114"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}