Apple has had a 56% bull run since the new year, but some media channels and Wall Street are now sending bearish signals. Is the 2% drop since the beginning of August just a bump in the high road or is there substance behind the negative speculation? Wall Street warns that the company could suffer from weakening iPhone sales, but Apple’s expansion into emerging markets such as India, Indonesia, and Vietnam could offset some of the sales declines, which Wall Street doesn’t seem to be considering. Other tech companies such as Nvidia and AMD have already enjoyed massive share price boosts from AI technology. Apple’s entry into the AI space with Ajax Generative AI (Apple GPT) should also have a positive effect on the bottom line if the demo goes well.
And then there’s Apple's high-yield savings account, which has already hit over $10 billion in customer deposits. The deposit account, launched in April, lets Apple Card users earn an annual percentage yield of 4.15% on savings.
In conclusion, Apple is a mammoth company boasting the largest market cap of all time. Pessimistic reporting by the media may nudge AAPL down in the coming weeks, but the long-term future still looks bright, so don’t expect a downturn to last long. Here are some excellent insights and additional factors driving Apple’s future from Barron’s.
Apple’s June quarter earnings report isn’t going to be much of a growth story, and with the stock already 50% higher for the year to date, there isn’t much room for error. But the company’s legion of bullish analysts see better growth ahead, and project further gains for what is already the world’s most valued company, with a $3.1 trillion market cap. Apple (ticker: AAPL) will report after the close of trading Thursday. For the fiscal third quarter, analysts expect it to report sales of $81.9 billion, down about 1% from the year earlier quarter, with a profit of $1.19 a share, down a penny from a year ago.
The Street sees $40.3 billion in sales for the iPhone, which would be down about 1%, according to FactSet, with Mac sales of $6.6 billion, and iPad sales of $6.5 billion, both off about 10%. Those declines are expected to be offset by the “wearables, home and accessories” category, with estimated sales of $8.3 billion, up 3%, and services revenue of $20.8 billion, up 6%.
One key to the quarter will be how Apple does in its “Greater China” category, which includes the mainland as well as Taiwan, Hong Kong, and Macau. Street estimates call for $13.6 billion in revenue, which would be down 7%. Revenue from the Americas is projected to be $38 billion, up 1.5% from a year earlier. In reporting March quarter results, Apple CFO Luca Maestri said June revenue performance would be comparable to the March quarter, which was down 2.5% from a year earlier. Maestri said at the time that currency would reduce revenue by about four percentage points, and the services business would continue to face macroeconomic headwinds in digital advertising and gaming.
Note the digital ad business in the quarter at both Alphabet (GOOGL) and Meta Platforms (META) topped Street estimates, which could be a positive factor. And stabilization of the dollar could mean a smaller currency impact than Maestri had expected.
Piper Sandler analyst Harsh Kumar wrote in a research note previewing the quarter that “China handset concerns for Apple are a bit overblown.” He thinks the company’s earnings call will be well received, driven by resilience from the Chinese and iPhone segments. Kumar on Monday repeated his Overweight rating, while lifting his target price to $220, from $180. Wedbush analyst Dan Ives thinks Apple should report at least an in-line quarter on iPhone revenue, and potentially better than that, given “a clear uptick in demand around the key China region this quarter” for iPhones.
