Apple Stock Resists Tech Selloff. There’s Good News on iPhone Sales.

Apple iPhone 17 sales look to be outperforming its predecessor in China. (Photo by HECTOR RETAMAL/AFP via Getty Images)

Key Points

• Apple shares fell 1% in early trading, outperforming most other Magnificent Seven stocks amid a tech sector rotation.
• iPhone sales in China increased by 22% in the first month after the iPhone 17 launch, driven by an upgrade cycle from Covid-era buyers.
• Apple will cut App Store fees from 30% to 15% for mini-app developers globally, particularly impacting China’s WeChat app revenue.

Apple was slipping early on Friday but was performing better than most of its large technology peers. The iPhone maker is benefiting from strong sales in China and could be about to unlock a new source of revenue.

Apple shares were down 0.1% in early trading. Of the so-called Magnificent Seven stocks—comprising Apple, Google-parent Alphabet , Amazon.com , Meta Platforms, Microsoft , Nvidia and Tesla —only Microsoft was performing better early Friday amid a rotation away from the tech sector.

Apple also avoided the worst of the selling Thursday, slipping just 0.2%.

Apple’s relatively limited spending on artificial-intelligence initiatives looks to be shielding it from the selloff in AI-exposed stocks. Additionally, sales in China look to be performing well, with iPhone sales in the country up 22% in the first month after the launch of the latest iPhone 17 model compared with the year earlier, according to Counterpoint Research data published Friday.

“We have yet to see any tapering past the shopping season in terms of the iPhone 17 and I am attributing this to the upgrade cycle coinciding with Apple delivering a new device that brings great value,” said Counterpoint analyst Ivan Lam. “It was important for Apple to deliver on it this year to ride the big upgrade cycle from Covid-era buyers, and it has done so in spades.”

Apple took another important step in the Chinese market this week as it said Thursday it would cut its App Store fees from 30% to 15% for some app developers, so long as they sign up for certain requirements including using software to verify a user’s age. The new fee applies to so-called mini-apps, small applications designed to operate within an app or platform.

While the change is applicable globally, it is particularly important in China where such mini-apps are common.

In particular it should give Apple a slice of revenue generated via mini-games inside the dominant WeChat app, owned by Chinese internet company Tencent Holdings . Apple had previously demanded Tencent close loopholes inside WeChat that funneled users to external payment systems, according to Bloomberg.

Write to Adam Clark at adam.clark@barrons.com