Important Takeaways
- Despite a decline in iPhone sales in China, Apple exceeded Q2 earnings forecasts.
- According to the CFO, the services industry would increase by 14%, propelling upcoming Apple breakthroughs like AI-powered gadgets.
- With a 320% growth in stock price over the last five years, Apple’s long-term investment potential is still significant.
The Effect of Apple’s Earnings on Stock
Apple reported $85.78 billion in revenue for the quarter, which was 5% more than the previous year. The company’s quarterly earnings per share came in at $1.40, which was an 11% increase from the previous year. At $84.53 billion and $1.35 per share, respectively, revenue and earnings per share exceeded forecasts. According to Luca Maestri, the company’s CFO, they delivered $32 billion to shareholders with an operating cash flow of $29 billion, despite the positive profitability. iPhone revenue was $39.30 billion, which represents 46% of total sales, compared to the projected earnings of $38.81 billion. Sales of iPhones were lower than they were the previous year, nevertheless. In China, where revenue fell by about 6.3%, they were very poor.
Support came from sales in other departments. Revenue for the Mac division was $7.01 billion, which was more than the projected earnings of $7.02 billion, and iPad revenue was $7.16 billion, which was higher than $6.61 billion, representing a 24% YoY rise. The total revenue from services was $24.21 billion. Revenue from wearables, homes, and accessories was $8.10 billion, compared to analysts’ estimates of $7.79 billion. Apple has a positive outlook for the current quarter. As in the last three years, the CFO anticipates that the services sector will rise by 14%. According to the firm, there are currently one billion paying subscribers.
Apple’s Future Plans: What We Now Know
The business is always searching for its next big hit. After years of development, it attempted to launch an automobile but was unable to deliver a finished product. In February 2024, the project was officially scrapped. Apple’s latest venture into mixed-reality space, or “spatial computing,” as the firm calls it, is the Vision Pro. The computer giant sees potential prospects in the smart home market, which is another area Apple plans to cover. A long-term development is the creation of a personal robotic device driven by AI.
The most important developments for Apple tablets in 2024 will be the arrival of the iPad Pro, iPad Air, Apple Pencil, and Magnetic Keyboard. Additionally, Apple plans to switch tablet panels to OLED, which is what the iPhone uses. With a $2 trillion market capitalization, Apple is second in line behind Microsoft in terms of market worth. Moving in the direction of generative AI, the business has invested in generative AI, which may present opportunities, and has purchased the Canadian AI startup DarwinAI.
Apple’s stock price and forecast
Apple is a beneficial long-term investment because of its innovation, expansion in the services sector, and comparatively stable share prices. One of the oldest companies in the computer sector, AAPL was founded in 1980 at an offering price of $22. For long-term investors, it has been the most lucrative.
AAPL increased 320% over the preceding five years until reaching its highest intraday level ever on June 12, 2024, at $220. Apple’s share price is expected to be supported by its $110 billion stock repurchase. With an average estimate of $386.8 billion, Apple is predicted to generate better revenues than last year ($383.3 billion), but lower than 2022’s revenue of $394.3 billion.
With a potential upside of $300 per share, Tipranks rates Apple’s stock as a moderate buy based on the projections of over 30 Wall Street analysts.
By 2025, the stock may hit $237. The share price may reach $561 by 2030, when the company is valued at over $8.7 trillion, which would represent an increase of more than 200% from its current price.
It is anticipated that the corporation would become more profitable in 2024 and 2025, with projected earnings per share of $6.59 and $7.28, respectively, more than in the previous two years. The expansion and sustainability of the services sector are the primary determinants of the bullish tendencies. Revenues are expected to be sustained in the upcoming quarters due to the expansion of AppleCare, cloud services, and payment.
