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Expectations are very muted as Apple, Inc. (NASDAQ:AAPL) prepares to announce its fiscal year 2024 second-quarter results Thursday after the market close.
Apple’s Key Q2 Numbers: Apple’s year-over-year revenue declining streak is expected to resume and the bottom-line performance is expected to be flattish from a year earlier.
| Q2’24 Consensus* | Q2’23 | Q1’24 | |
| Revenue | $90.01B | $94.84B | $119.6B |
| Non-GAAP EPS | $1.50 | $1.52 | $2.18 |
| Gross margin | N/A | 44.26% | 45.88% |
The predicament is primarily due to the weak uptake of its flagship iPhone device. Bullish analyst Daniel Ives said in a recent note that he expects iPhone unit sales in China to be softer, with revenue potentially declining year-over-year, due to Huawei competition and a lackluster iPhone 15 upgrade cycle.
Market research firm Canalys said worldwide smartphone shipments rose 10% year-over-year in the first quarter to 296.2 million units. Apple’s shipments, however, fell 16% to 48.7 million units and its market share fell five points to 16%.
Morgan Stanley analyst Erik Woodring said he expected a slight March quarter beat from April, with the headline metrics likely coming in at $91 billion and $1.51 per share, respectively.
See Also: Everything You Need to Know About Apple Stock
Apple Businesses: Woodring sees iPhone and iPad build stability, slight Mac shipment upside, and Services outperformance. Estimates provided by Morgan Stanley (consensus and in-house) for the various product categories are as follows:
| Consensus | Morgan Stanley’s estimates | Q2’23 | Q1’24 | |
| iPhone | $46.42B | $46.48B | $51.33B | $69.70B |
| Mac | $6.88B | $6.63B | $7.17B | $7.78B |
| iPad | $5.94B | $6.39B | $6.67B | $7.02B |
| Wearable, Home & Accessories | $8.08B | $7.93B | $8.76B | $11.05B |
| Services | $23.26B | $23.56B | $20.91B | $23.12B |
Forward Outlook: For the third quarter, which is seasonally weak, the Street forecasts earnings per share of $1.30 and revenue of $82.89 billion. Woodring expects the company to guide revenue 4-7% below consensus.
Ives models June-quarter iPhone revenue of about $35 billion and total revenue in the $80 billion range. He expects things to improve with the launch of the iPhone 16 model. “The good news is help is on the way as we believe a pent-up demand cycle with an AI-driven iPhone 16 model on the horizon should enable Cook & Co. to return to growth again in China with tailwinds into FY25,” he said.
Key upcoming events that could have a bearing on the stock included:
Morgan Stanley’s Woodring said, “Historically, a mixed March quarter earnings report/June quarter guide
has been neutral to slightly positive for Apple’s shares in the day, week and month following earnings.”
Earnings Call Focus: CEO Tim Cook will likely shed more light on the broader AI strategy as the technology would be a game-changer for the Apple story over the coming years, said Ives. This assumes importance because rumors suggest the company is negotiating with both OpenAI and Alphabet to bring AI to its iPhones.
The Apple Stock: In premarket trading, the stock rose 1.09% to $171.15, according to Benzinga Pro data. The stock has shed roughly 12% for the year-to-date period compared to the Invesco QQQ ETF‘s (NASDAQ:QQQ) 3.07% gain and 5.60% rise by the SPDR S&P 500 ETF Trust (NYSE:SPY).
Photo courtesy: Apple
