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 stock market value surpassed $3 trillion for the first time, driven by signs of improving inflation and expectations of successful expansion into new markets, with technology stocks rebounding on bets that the US Federal Reserve may slow its rate hikes.
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.
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.
Apple's recent sell-off due to concerns about a Chinese crackdown on iPhone usage among government workers should not deter investors from the tech giant.
The launch of the latest iPhones by Apple aims to boost consumers and investors amidst falling share prices caused by deteriorating international relations, with tensions between Beijing and Washington threatening sales in China, one of Apple's biggest markets.
Summary: Apple announced the iPhone 15 and iPhone 15 Pro at its annual launch event, with the Pro model keeping the same price as last year's version, while the Nasdaq Composite suffered its first losing day in three, largely driven by a 13.5% drop in Oracle's shares.
The major US carriers, including AT&T, T-Mobile, and Verizon, are offering up to $1,000 off the iPhone 15 if certain requirements are met, such as trading in a recent phone and committing to a financing plan with the carrier, providing an opportunity for carriers to entice customers to switch to their newer, more expensive plans.
The new iPhone 15 models, featuring aesthetic and technological changes including new materials, camera and computing upgrades, and new colors, are available for pre-order, with prices starting at $799 for the base model, and will be released on September 22.
Apple is expected to achieve year-over-year growth in Q4 thanks to better than expected iPhone revenue and profit, with the iPhone 15 Pro Max and iPhone 15 Plus performing well, while the standard iPhone 15 and iPhone 15 Pro may face order cuts if their prices are not reduced, according to Ming-Chi Kuo's analysis based on supply chain sources.
With the release of the iPhone 15, AT&T, T-Mobile, and Verizon are all offering up to $1,000 off the new phone if certain requirements are met, including trading in a recent phone and committing to a financing plan with the carrier.
This article mentions the stock of Apple (NASDAQ:AAPL). The author's recommendation is to buy Apple's stock.
The author's core argument is that Apple's historical growth and expanding margins make it an attractive investment. They also discuss the pricing strategies and innovations of Apple's new iPhone lineup, suggesting that it will drive sales growth. The author also addresses the potential challenges of prolonged upgrade cycles and the risks associated with the Chinese government's actions towards Apple. They provide valuation metrics and projections for Apple's future revenue and stock price.
Apple has moved $7 billion worth of iPhone production from China to India and plans to increase production in India to $40 billion within the next five years.
The third-generation Apple iPhone SE is currently on sale for $149, a $230 discount from its original price, making it an affordable entry point into the iOS ecosystem.
Apple CEO Tim Cook sold approximately $41 million worth of stock, his largest sale in over two years, as shares of the company decline from recent highs.
Apple's stock, despite recent declines, remains an attractive long-term investment due to its successful track record in dominating various tech markets, its undervalued price-to-earnings ratio, and the booming growth of its services business.
Google could be paying Apple between $18 billion to $20 billion a year to maintain its status as the dominant search engine on the iPhone, potentially generating 14-16% of Apple's annual operating profits, but this agreement may be at risk due to an ongoing antitrust suit.
