Apple Stock (NASDAQ:AAPL)
Apple, which is one of the largest technology companies in the world, just recently disclosed its financial results for the preceding quarter, and the numbers were outstanding. The company reported a record-breaking $111.4 billion in revenue, with a net income of $28.8 billion, despite the fact that the pandemic is still active and that there are challenges in the global supply chain. In the following paragraphs, we will take a more in-depth look at Apple’s financial performance, investigate the factors that drove these impressive results, and discuss the implications these results have for the company and its investors.
The next major technology company to report its quarterly financial results is Apple AAPL +0.29%. According to Daniel Ives of Wedbush, we should anticipate a strong showing on the back of consistent iPhone demand.
Strong Sales on the iPhone
The impressive sales of Apple’s flagship product, the iPhone, were one of the primary factors that contributed to the company’s overall financial success. The company reported $65.6 billion in revenue from iPhone sales, which is a 17% increase from the same time period the previous year. The high demand for the iPhone 12, which was released in October 2020 and has been positively received by customers, was the primary factor behind this expansion.
Additionally, Apple’s strategy of offering a variety of models at varying price points has proven to be successful for the company. The company reported healthy sales of both the more expensive iPhone 12 Pro model as well as the iPhone SE model, which is priced lower. Apple’s ability to appeal to a wider variety of customers and capture a larger share of the smartphone market has been made possible by the diverse product line that the company offers.
Ives believes that the demand for iPhones in China is what is driving sales, and Apple’s (NASDAQ:AAPL) revenue from iPhone sales should be at least in line with expectations when the company reports its financial results for the second quarter on Thursday. According to the results of a poll conducted by FactSet with the participation of industry analysts, the general consensus predicts that Apple will report $92.91 billion in revenue for the March quarter, with $48.8 billion coming from sales of iPhones.
According to what Ives stated in a research note that was published on Monday, “We believe iPhone units […] could show some upside despite the shaky macro as higher ASPs [average selling prices] and overall upgrade activity on iPhone Pro 14 carry the day.”
On Apple stock, Wedbush reaffirmed both its Outperform rating and its target price of $205 per share. The price of Apple shares fell 0.4%, reaching $169.09 per share.
A cautionary note from Amazon.com (NASDAQ:AMZN) about cautious consumer spending and slowing growth in cloud computing dampened the spirits of tech investors last week, despite the fact that Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL), the parent company of Google, both posted better-than-expected earnings. The outlook that Apple has on the amount that consumers around the world are spending will be crucial.
According to Wedbush’s calculations, the average selling price of an iPhone is climbing toward the range of $900 and $925, and Apple is increasing its market share in China while maintaining its market share in the United States and Europe. Ives, on the other hand, believes that Apple will play down its prospects for the current quarter in light of the rumored impending release of the iPhone 15 later this year.
Ives wrote in an email that the company should expect “relatively conservative guidance” for the month of June because “this is all about the drumroll to the main event with the anniversary iPhone 15 launch scheduled for the September timeframe.”
Expanding Markets for Services and Wearable Goods
Despite the fact that the iPhone continues to be Apple’s most profitable product, the company’s services and wearables divisions both showed impressive growth in the most recent quarter. Revenue from Apple’s services, which includes the App Store, Apple Music, and iCloud, hit a new all-time high of $15.8 billion, representing a 24 percent increase compared to the same quarter the previous year.
The wearables segment, which includes the Apple Watch and AirPods, brought in revenue of $13 billion, which is a 30% increase from the same time period the previous year. This expansion was made possible by the robust demand for Apple’s new AirPods Max headphones and its Apple Watch Series 6 smartwatch.
There are other analysts besides Ives who are pointing out the possibility of more pessimistic guidance for the June quarter. Bank of America analysts have stated that they anticipate Apple will suffer a revenue decline of 1% from the previous year for its fiscal third quarter. This would put quarterly revenue at $81.7 billion, which is lower than the consensus expectation of $84.4 billion on Wall Street.
Despite this, Bank of America increased its price target on Apple stock from $168 to $173 while maintaining its neutral rating. The investment bank explained that the change reflected a higher market multiple being attributed to the shares of the company that makes iPhones.
As a conclusion, the financial results that Apple posted for the most recent quarter demonstrate the company’s continued strength and resilience, even in the face of challenges on a global scale. Apple’s impressive performance can be attributed to a number of factors, including brisk sales of iPhones, expanding markets for services and wearables, and ongoing investments in research and development. Apple is a desirable option for shareholders in the technology industry due to the company’s robust financial position as well as its commitment to delivering value to existing shareholders.
Featured Image: Unsplash @ currentspaces
