Apple Q1 2024 earnings preview: will strong product lineup fuel growth despite flat revenues?

[MongiIG]

Amid flat revenues and a challenging Chinese market, the tech giant's AI integration and upcoming VR headset launch are key focal points as Apple prepares to report its Q1 2024 earnings.

 

Source: Bloomberg

 

Shares Apple Inc. iPhone China Revenue Huawei

 Written by: Tony Sycamore | Market Analyst, Australia | Publication date: Thursday 25 January 2024 01:26

When will Apple report its latest earnings?

Apple is scheduled to report its Q1 earnings on Thursday, February 1, 2024.

The backdrop

Apple's Q4 2023 earnings, reported in early November, surpassed analysts' expectations for sales and earnings per share, but the company reported a 1% year-over-year decline in quarterly revenues.

Tim Cook, Apple's CEO, stated, "We now have our strongest lineup of products ever heading into the holiday season, including the iPhone 15 lineup and our first carbon-neutral Apple Watch models, a significant milestone in our efforts to make all Apple products carbon-neutral by 2030."

Key financials

Wall Street's expectations for the upcoming results are as follows:

• EPS: $2.11 vs $1.46 per share in the previous quarter
• Revenue: $117.95 billion vs $89.5 billion

Q4 2023 highlights

1. An all-time revenue record in services of $22.31 billion compared to the expected $21.35 billion. The services segment includes subscriptions such as iCloud storage, the App Store, and Apple Music.
2. A September quarter revenue record for the iPhone of $43.81 billion. Moreover, the iPhone was the only hardware line for Apple to exhibit growth in the quarter, while the Mac and iPad businesses contracted during the quarter. The period only included about one week of iPhone 15 sales.
3. The wearables section, which includes AirPods and Apple Watches, experienced a year-over-year decrease of over 3%.

Net sales by category

 

Source: Apple.com

China's chill: Apple vs. Huawei

Of concern to shareholders, Apple's sales in Greater China, its third largest market, were flat on the year. Chinese government officials are banned from using Apple's devices in favour of homegrown products like Huawei. Outside of the public sector, the Chinese consumer remains cautious, as the Chinese economy remains tepid.

Net sale by segment

 

Source: Apple.com

What to look for in Q2?

In its Q4 Earnings call, CFO Luca Maestri guided that Apple expected December quarter revenue to be similar to last year's.

After a recent broker upgrade, which helped spark a sharp move higher in the Apple share price, there will be interest in commentary around the following topics:

• The potential for long-term gains as the company integrates AI into iPhones
• Prospects for the Vision Pro virtual reality headset, scheduled to launch on February 2 – a launch which seems to lack "buzz"
• Whether Apple continues to gain market share in a contracting Chinese market
• An update on iPhone 15 sales
• The impact of the removal of the Oxygen feature from Apple Watches after its legal setback
• Insights into the iPhone 16 due for release in September of this year.

Apple's sale revenue 2015 to the present

 

Source: TradingEconomics

Apple technical analysis

Following an almost 48% gain in 2023, Apple's share price has shrugged off some New Year nerves to trade higher in January, just 2.5% below its $199.62 all-time high.

Providing Apple's share price remains above a support band near $180.00/75, including the 200-day moving average at $181.45, recent lows in the $180 area, and uptrend support, we expect Apple's shares to break above resistance at $199 in the coming months, aiming for $220.00.

It's essential to note that if Apple's share price experiences a sustained break below $180/75, it would signal a deeper pullback, initially toward the $165.57 low from last October.

Apple daily chart

 

Source: TradingView

• _{Source: TradingView. The figures stated are as of 24 January 2024. Past performance is not a reliable indicator of future performance. This report does not contain and is not to be taken as containing any financial product advice or financial product recommendation.}

 

 

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