Why Apple Is No Longer a Hot Stock

The Nasdaq-100 will be re-weighted and Apple's (AAPL) share of the index's value will drop from 20% to 12%, according to a Wall Street Journalreport. The index is made up of the 100 largest non-financial stocks traded on the Nasdaq. The actively traded QQQ index fund (QQQ) is based on the Nasdaq-100.

The Journal forecasts that the move by Nasdaq could harm Apple's share price because money managers who track the index will need to sell its shares to keep in step with the index composition.

The re-weighting may be the least of Apple's concerns right now. Wall Street has turned against the company since the beginning of the year. Its share price is up only 6%. The Nasdaq Composite (IXIC) is up nearly as much. More important, a number of tech stocks have done much better than Apple over the same period. Many of these shares are in companies that provide enterprise solutions and infrastructure products.

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This shows that Wall Street has begun to favor non-consumer tech stocks. SAP (SAP), Nvidia (NVDA), Oracle (ORCL), and IBM (IBM) have posted better performances than Apple since the beginning of January.

Some investors are concerned that Google's (GOOG) Android has taken market share in the smartphone operating systems business at the expense of Apple's OS. This should not cause them to abandon Apple. Android runs on a number of smartphones, while Apple's iOS runs only on the iPhone and iPad. It's hard to say what advantage Android gives Google. There is certainly no evidence that it has improved Google's sales, but perception is often reality on Wall Street.

Apple does, however, have a potential problem with the iPhone. The expansion of 4G super-fast wireless broadband has happened quickly and all of the major carriers offer smartphones that use the technology. There is no sign Apple will offer a 4G compliant iPhone anytime soon -- or an iPad that works on these networks. Sales of Macs and iPods are not strong enough to make up for any drop in sales of the Apple wireless products.

Apple is about to release its second-quarter earnings. They may be very good, but they represent the past -- not the near-term future hurdles that Apple will have to clear.

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