To The Moon

Let him cook.

$Apple(AAPL)$’s latest earnings report showcases a solid quarter, driven by strong sales in iPads and services. Despite beating Wall Street expectations, the stock may not see significant gains. Here’s a detailed look at the company’s performance and why I believe in Tim Cook’s leadership.

Apple reported fiscal third-quarter earnings that exceeded Wall Street estimates, with overall revenue rising 5%. Here’s a breakdown of the numbers:

• Earnings per share (EPS): $1.40 vs. $1.35 estimated

• Revenue: $85.78 billion vs. $84.53 billion estimated

• iPhone revenue: $39.30 billion vs. $38.81 billion estimated

• Mac revenue: $7.01 billion vs. $7.02 billion estimated

• iPad revenue: $7.16 billion vs. $6.61 billion estimated

• Wearables, Home, and Accessories revenue: $8.10 billion vs. $7.79 billion estimated

• Services revenue: $24.21 billion vs. $24.01 billion estimated

• Gross margin: 46.3% vs. 46.1% estimated

Apple's net income for the quarter was $21.44 billion, up from $19.88 billion in the same period last year. The iPhone remains Apple’s most important product, accounting for about 46% of total sales, though it saw a slight annual decline in revenue.

The iPad division stood out with nearly 24% year-over-year growth, reaching $7.16 billion in sales. This surge was fueled by new iPad releases, which spurred a wave of upgrades. Notably, about half of the iPad buyers were first-time owners, indicating that the market is far from saturated.

Services revenue, a critical growth category for Apple, increased by 14% to $24.21 billion. This segment includes hardware warranties, revenue from Google, cloud storage subscriptions, and content subscriptions like Apple TV+. Apple’s services business benefits from a growing base of active devices, which reached 2.2 billion in February.

Despite the overall positive results, Apple faced challenges in China, with sales declining 6% to $14.72 billion. However, Tim Cook highlighted that the iPhone install base in China hit a record, with the top three selling smartphones in urban China being Apple products.

Apple spent $32 billion on dividends and share repurchases during the quarter, demonstrating its commitment to returning value to shareholders. While these solid numbers are encouraging, I’m cautious about the stock’s immediate performance. Despite a strong quarter, historical patterns suggest that Apple’s stock might not rise significantly and could even dip.

Under Tim Cook’s leadership, Apple has shown resilience and innovation. Cook’s ability to redeploy resources towards AI and new services, while maintaining a focus on core products, is commendable. His strategic decisions, such as increasing spending on AI and developing the new Apple Intelligence service, position the company well for future growth.

Cook’s approach to balancing internal innovation with external partnerships, like the hybrid data center strategy, reflects his pragmatic leadership. By leveraging both in-house and partner capabilities, Apple ensures it remains competitive and agile in a rapidly evolving tech landscape.

Conclusion

Apple’s strong Q3 performance underscores the company’s robust business model and strategic vision. While the stock may not see an immediate rise, the long-term outlook remains positive under Tim Cook’s leadership. As Cook continues to drive innovation and growth, I’m confident in Apple’s ability to navigate challenges and capitalize on new opportunities.

In the end, it’s not just about the quarterly numbers. It’s about trusting in a leadership that has consistently delivered value and shown the foresight to invest in the future. Tim Cook has proven he has what it takes to steer Apple through both calm and turbulent waters, and I believe we should let him continue to lead.

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Disclaimer: This is just my analysis, and the market is unpredictable. Do your own research before making any investment decisions.