What happened
Shares of several component suppliers to the Apple (AAPL 1.44%) ecosystem rose sharply in May 2018, according to data from S&P Global Market Intelligence. Qualcomm (QCOM 1.79%) investors enjoyed a 13.9% return, Cypress Semiconductor (CY +0.00%) saw share prices rise by 12.9%, and STMicroelectronics (STM 2.37%) delivered a 9.8% gain. For the record, shares of Apple itself rose 13.1% higher in May.
Image source: Getty Images.
So what
Analysts and investors had largely expected Apple's second-quarter report to be a dud with weak iPhone sales and muted business trends. But the company delivered a solid report on May 1, exceeding Wall Street's targets across the board and beating the drum for strong iPhone demand.
Apple shares surged 5% the next day and the component makers mentioned above followed suit. Importantly, management indicated that iPhone demand is running high as the company enters the third quarter, undermining analyst fears of slow manufacturing lines.
Now what
Of course, these diversified chipmakers don't live and die by Apple orders alone.
Cypress also generated positive vibes in May as analyst firm Cowen found the stock undervalued next to the massive opportunity inherent in its Internet of Things and memory controller products. At the same time, Credit Suisse highlighted STMicroelectronics for similar reasons. The firm particularly lied STMicro's "resilient" business results in the face of volatile Apple builds and wobbly material supply lines.
Qualcomm shares rallied as the Trump administration appeared to be closer to a trade agreement with China, which would pave the way to closing the all-important merger with NXP Semiconductors (NXPI 3.20%). NXP shares still trade 6% below Qualcomm's all-cash buyout bid of $127.50 per share, but that's a strong recovery from the 22% discount that stock was trading at a month ago.
But all of that was just icing on the underlying Apple cake. May was simply a good month for Cupertino's suppliers.
