To The Moon

Everyone is waiting impatiently for $Apple(AAPL)$’s Q2 2023 quarterly earnings that will be released later today - Thu, 04 May 2023.

It is the last FAANG member to release its results.

Before hearing the actuals, below please find Wall Street’s expectations (gathered from 24 analysts).

• Revenue. Between $89.79 Billion (low) and $98.84 Billion (high). Average - $92.94 Billion.

• EPS. Between low & high estimates of $1.37 & $1.56. Average - $1.43.

• These estimates would be slightly below its Q2 2022 record-breaking revenue of $97.3 Billion & EPS of $1.54.

Overall, many expect APPLE Inc to report a strong Q2 2023 performance.

Of the numerous revenue streams, below are two possible bright sparks that would be holding Apple’s earnings fort.

(1) iPhone 14.

• Main driver of Apple's revenue growth will likely be the iPhone 14, that has been well received by consumers and has benefited from the 5G upgrade cycle.

• iPhone segment could account for >50% of Apple’s total revenue; just like in Q2 2022 where sales reached $50.6 Billion.

(2) Apple Services.

• 2nd Revenue driver will be Apple’s Services business.

• It has been growing “steadily" over time and with diversification in the game.

• The wide-ranging services grouped under “Apple Services” includes (a) App Store, (b) Apple Music, (c) Apple TV+, (d) iCloud, (e) Apple Pay etc…

• In Q2 2022, Services generated $19.8 Billion in revenue, +17.3% (YoY).

• If Apple’s newest product (Apple high yield savings account launched on 17 Apr 2023 is grouped under “Services”) and grows from strength to strength; there should be “significant” growth to be reported come Q3 2023. Agree ?

Not So Good News

After extolling on Apple’s “good” it is time to balance it with the “not so good” news.

(3) Mac And iPad

Faling PC demand is a universal pattern

• Looking at AMD’s Q1 2023 earnings report, it is not difficult to “accurately infer” that slow down in PC / Tablet demand would be a challenge faced by Apple as well.

• This should affect both Mac and iPad sales that have surged in Q2 2022 due to covid-pandemic-induced demand for remote work and learning devices.

• In Q2 2022, Mac revenue was $10.44 Billion & iPad revenue was $7.65 Billion, up +14.65% & -2.06% YoY.

• For coming reporting, revenue from two products is expected to decline by double digits YoY.

(4) Semiconductor Chip

• On-going chip shortage that has affected many industries, including consumer electronics.

• Although Apple managed to mitigate some of the impact by prioritizing its high-end products and leveraging its supply chain relationships, it still faces some constraints that could limit its production capacity and product availability.

(5) New Products To Be Launched

• Despite the challenges, Apple still have a strong pipeline of innovation that could fuel its long-term growth.

• New products slated for Q2 2023 release includes (a) M2 Pro and M2 Max MacBook Pro models, (b) M2 Mac mini and (c) 2nd generation HomePod.

• And the much anticipated (1) Augment Reality/Virtual (AR/VR) Reality glasses and elusive (2) Apple Electric Vehicle Car.

Can Apple's earnings result halt US market's fall ?

With all above said taken into considerations, I think Apple will hand in a credible report card.

One that:

• Reflects its resilience

• Shows its leadership in smartphone telephony and services markets.

• Faces some challenges in the Mac and iPad demand and chip shortage.

Apple Inc has a bright future ahead with its continuous innovation and customer loyalty.

Looking at Thu, 04 May Top 5 companies (by Market Cap) reporting their quarterly earnings:

• All are companies from diverse industries

• Of the 5 companies, 2 are “oil” related. Of late oil prices have fallen to a low $69 per barrel.

As such, I don’t think that Apple’s earnings results will be able to influence and halt US market’s decline.

Of course, it is hoped that its earnings proved to be “positive” enough to propel Apple’s stock price “higher”.

Hope my wish would come true ! Fingers crossed !

• Do you think Apple will be able to put out a good set of earnings data ?

• Do you think Apple’s results will be able to hold off US market’s continuous dip ?

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