A Resilient Surge Amid Headwinds
Apple (AAPL) stock weathered a stormy close to 2023 and tempestuous start to 2024, as analysts raced to outdo each other in predicting its demise. Yet, defying all prognostications, equities have surged by approximately 8% since the caliginous onset of January 5. As February 1, the release date for Q1 FY24 earnings, draws nigh, Apple’s stock ascends toward the pinnacles it reached mid-December, boosted by a flurry of bullish forecast adjustments that have crowned AAPL with a Zacks Rank #1 (Strong Buy).
Apple, the quintessential Wall Street leviathan, has soared far beyond its firmament as an iPhone manufacturer, metamorphosing into a multifaceted titan. Inexplicably, AAPL trades above all its pivotal short-term and long-term moving averages.
The Whims of Negativity
A cabal of prominent analysts has recently downgraded Apple, fretting about slackening iPhone sales, especially in the vast Chinese market. Their trepidations compound broader anxieties over a pall of saturation that looms over the high-end smartphone sphere. In a further twist, legal wrangles concerning the App Store – an insignificant fleabite – have stoked their embers of concern. This fretful scenario is compounded by the mounting specter of competition, none more potent than the force Huawei Technologies exerts in the world’s second-largest economy. AAPL, in litany with conglomerates from various industries, suffers as the behemoth of China grapples with a sluggish economy, mired in geopolitical crosscurrents.
Despite these afflictions, AAPL’s sales have ebbed year over year for the past four quarters, culminating in a 2.8% decrease in total FY23 revenue, its third annal decline in eight years.
The iPhone Enigma
Apple’s aegis remains unassailable, and its cycles of novel phones and devices have forged an uncanny bond with consumers who clamor for each fresh morsel churned from Cupertino. Consumers seamlessly transition to the nascent iPhones and other gadgets, in willed denial of any game-changing differences, obstinately – they refuse to extricate themselves from Apple’s gravitational orbit. The behemoth peddled $200 billion of iPhones in FY23, a staggering ascent from $142 billion in FY19. AAPL’s enduring growth narrative writes itself in a world ensnared in the insatiable lure of smartphones, a narrative further embellished by subscriptions nesting within its flagship services unit.
CEO Tim Cook has astutely steered Apple beyond being an iPhone monolith, transforming it into a veritable compendium that perennially entices its burgeoning customer base. Apple’s services segment plundered a 9% increase in FY23 – constituting 22% of its revenue, a purlieu eclipsing the iPhone by a distance.
The Dawn Ahead
Taiwan Semiconductor Manufacturing Company’s (TSM) recent buoyant results and bullish guidance presage a resurgence in the ostensibly beleaguered smartphone market. Apple’s FY24 revenues surge by a projected 3% and are anticipated to vault further by 6% in FY25, culminating in a $418.36 billion crescendo, an ascension from $383.29 billion in FY23.
Simultaneously, adjusted earnings are projected to burgeon by 8% in FY24 and 9% in FY25, a staggering leap from last year’s stagnation.
Apple’s earnings have surpassed all forecasts, with the isolated exception of a meager dereliction in the first quarter of FY23.
Performance, Technical Levels & Valuation
