Apple and Microsoft face slowdown and declining margins

Apple and Microsoft, which make up 15% of the S&P 500, are experiencing a slowdown in growth and declining margins. Apple has reported three consecutive quarters of declining revenues and has guided for a fourth quarter with expected declines in year-over-year revenues. Microsoft's cloud business, while benefiting from AI growth, has seen revenue growth slow down and is guiding below street expectations for the next quarter. These companies are trading at high multiples and are facing headwinds such as increasing financing costs for their products, geopolitical risks, and possible market saturation. The market may no longer turn a blind eye to these challenges, leading to potential multiple compression and downside risk.