Main topic: Apple's Q3 earnings and performance in the smartphone market
Key points:
- iPhone revenue declined from $40.66 billion to $39.67 billion compared to the same quarter last year
- Services revenue increased from $19.6 billion to $21.2 billion, beating analyst expectations
- Apple saw growth in China with sales up 8% year-over-year
- CEO Tim Cook highlighted the company's focus on AI and machine learning, including generative AI
- Apple plans to release its Vision Pro headset, a spatial computing device, early next year.
- Apple's total revenue dropped for the third consecutive quarter, shrinking 1% year over year.
- iPhone, Mac, and iPad sales all saw declines of 2%, 7%, and 20% respectively.
- However, Apple's services business, which includes the App Store and subscription services, grew 8% to its highest level ever.
- Services accounted for over one fourth of Apple's revenue in the quarter, the highest proportion since at least 2020.
- The growth in services is good news for Apple's bottom line, as the gross profit margin from services is nearly double that from hardware products.
Main topic: Apple's financials in Q3 2023
Key points:
1. Apple's revenue from its Services segment reached an all-time high of $21.2 billion, growing 8% year-over-year.
2. iPhone, Mac, and iPad revenue declined compared to a year ago, with iPad sales experiencing the largest drop.
3. Overall, revenues dropped less than 2% year-over-year, while profits increased about 2% to $19.9 billion.
Apple's iPhone sales in China have surpassed those in the United States for the first time, contributing to Apple potentially becoming the biggest player in the smartphone market this year, despite global smartphone shipments being on track to be the worst in a decade due to economic headwinds in China and the US, according to Counterpoint Research.
Investors are looking forward to after-the-bell earnings from Nvidia as the Dow, S&P 500, and Nasdaq are set to open slightly higher; Apple is now the most under-owned large-cap U.S. tech stock while Meta Platforms is the most over-owned.
Apple Inc. stock rallied 2.19% to $181.12, marking its fourth consecutive day of gains in a favorable trading session for the stock market.
Nvidia's market value surpasses Apple's as it leads the market higher amid the investing frenzy over artificial intelligence.
Four Big Tech companies - Apple, Microsoft, Tesla, and Meta - collectively lost $625 billion in market value this month, likely due to seasonal trends and a broader decline in US equities triggered by higher bond yields.
Digital mortgage lender Better.com had a disastrous public market debut, with its stock closing at just $1.19, resulting in a market cap of only $19.14 million, compared to its initial plans to go public at a $7.7 billion valuation. Conversely, Affirm, another fintech company, saw its stock prices rise by nearly 30% after reporting better-than-expected earnings.
This article mentions the stock of Apple (NASDAQ:AAPL). The author's suggestion is not explicitly stated, but they express concerns about the low dividend yield, modest dividend growth, and potential overvaluation of Apple's stock. The author also discusses Apple's strong brand, the possibility of an acquisition of Disney's assets, and the headwinds and risks facing the company. The author suggests that a recession or market correction could lead to a potential price drop and provide a good entry point for investors. However, they also acknowledge the potential for the stock to continue trending upwards, especially during the holiday season.
Apple stock rose more than 2% on Tuesday ahead of its Sept. 12 event where the company is expected to announce new products, including the iPhone 15 and new Apple watches.
Four major tech companies, including Apple, Alphabet, Microsoft, and Meta, have collectively spent over $1 trillion on stock buybacks in the past decade, exceeding the market values of Tesla, Meta, and Berkshire Hathaway.
Apple's stock is on track to snap a seven-month winning streak, despite a 6.3% rally over the past two weeks, as concerns over declining smartphone demand continue to affect the technology behemoth.
Salesforce surpasses Apple as the top-performing stock in the Dow Jones Industrial Average and continues to gain momentum after its latest earnings report.
Leading technology companies, including Apple, Nvidia, and Alphabet, have agreed to invest in Arm Holdings' initial public offering, which is targeting a valuation between $50 billion and $55 billion, according to sources.
Apple shares have declined due to falling revenue in its product segments, but the company's long-term outlook remains strong, driven by its booming services business and dominant market shares, with two reasons to buy Apple stock being the upcoming iPhone launch and its potential in high-growth industries like AI and virtual/augmented reality.
The stock market sinks as a tech selloff occurs due to investors' fear of more Fed rate hikes, with Apple, Tesla, and Nvidia all experiencing significant declines.
Wall Street's major averages slumped due to a fall in Apple shares, concerns over elevated oil prices, and worries about the impact of inflation, while an unexpected rise in a key U.S. services activity gauge raised concerns about higher interest rates.
Stocks sold off and U.S. Treasury yields rose for the second consecutive day, while Germany's manufacturing orders experienced a significant decline; Apple signed a long-term agreement with Arm, boosting anticipation for Arm's upcoming IPO; the European Commission designated Alphabet, Amazon, Apple, ByteDance, Meta, and Microsoft as "gatekeepers" under its new Digital Markets Act; Goldman Sachs updated its conviction list, adding a new company with projected revenue growth and removing another after a significant drop in shares; and markets are focusing on stubborn inflation and the threat of higher interest rates, causing stocks to be pressured and technology stocks to be particularly affected.
Big tech, including Apple, faced pressure as concerns grew over China potentially expanding its iPhone ban, while equity futures fell due to strong jobless claims figures, reinforcing the case for the Federal Reserve to maintain elevated interest rates.
Apple's stock fell nearly 4% and triggered a tech stock selloff after reports that China has expanded restrictions on iPhone use by government employees, leading to concerns about the financial impact of escalating tensions between the US and China.
The stock market is currently the most overvalued it has been since the dot-com bubble crash, according to Ned Davis Research, with high cash yields leading to a rush for money market funds.
Stocks rose on Friday as the Nasdaq rebounded from Apple's recent slide, fueled by speculation that the Federal Reserve may not raise interest rates in September, while concerns about rising energy prices and Apple's market value decline continue to linger.
The U.S. dollar index had its eighth consecutive week of gains, while global stock indexes ended slightly higher before key U.S. inflation data, with concerns that high interest rates may remain in place for longer than expected despite the Federal Reserve likely keeping rates unchanged this month. Longer-dated Treasury yields eased, Apple shares rose slightly after two days of losses, and oil prices increased.
Bitcoin could decline by more than 60% if Apple's market cap continues to decline, according to crypto analyst Nicholas Merten. A plummeting Apple market cap would have a significant impact on Bitcoin and other equities.
Apple's stock valuation is deemed unreasonable and reflective of a shrinking company by the Chairman of Miller Value Partners, highlighting the challenge for Apple to meet growth expectations given its size and current market capitalization.
If you had bought a top-of-the-line iPhone every time Apple released a new model instead of buying Apple stock, you would have spent around $16,000 on iPhones and made a profit of approximately $131,000 if you had bought the stock instead.
Arm stock is experiencing a second day of gains and is currently more popular than Apple.
The article does not mention any specific stock recommendations. However, it discusses Apple (NASDAQ:AAPL) extensively and highlights the author's positive view towards the company's valuation and growth prospects.
The author's core argument is that while Apple's growth has slowed, its elevated valuation is justified due to factors such as its superior competitive position, strong brand and connection with consumers, solid prospects for future growth, and strong financial position.
Key information and data mentioned in the article include:
- The Wall Street Journal reported that the Chinese government had banned iPhones for government employees, but the Chinese government later denied this report.
- If the ban had been true, analyst Dan Ives estimated it would be a hit of half a million iPhones, but he referred to it as "more bark than bite."
- Apple's growth has slowed, but its high valuation is justified due to its many advantages, including its competitive position and strong financials.
- Apple's valuation is less dependent on current earnings and more focused on long-term prospects.
- Apple's revenue is comparable to other massive companies, but it still has room for growth, especially in the high-margin services segment.
- Apple's dependence on China is both a risk and an advantage, as China is also dependent on Apple.
- The Chinese economy is facing challenges, and a cooperative relationship between the US and China would benefit Apple and the global economy.
- The author believes that Apple's strong management and adherence to secrecy and compartmentalization give it a unique edge.
- The author suggests that expectations for Apple may be too low if globalization is not receding as expected.
The senior indexes have failed to accurately represent the average stock for a long time, with small-cap stocks underperforming and a large number of stocks hitting new 12-month lows. Despite this, the rally in bigger names like Apple has provided some relative strength to the senior indexes, but uncertainty surrounding the Fed's interest rate decision and various economic factors suggest more volatility and choppy market action ahead.
