Bears of Apple Inc. have spent the last few months warning of supply-chain concerns regarding order reduction, competitive pressures in China, and poor iPhone uptake.
Nevertheless, Apple (AAPL) exceeded revenue forecasts in the most recent quarter, increased its margins, and demonstrated a surge in its services division.
According to Ben Reitzes, an analyst at Melius Research, the dynamic implies that investors who concentrate on “builds,” or supplier dynamics, are missing the mark. He commented, “Apple is a platform company with ‘levers’ that only a few companies in the world have,” after the company’s results announcement on Thursday.
Reitzes claimed that in addition to “limiting the damage” caused by China’s problems, Apple’s capacity to “flex margins higher” and display a growth increase in services was also useful in “pretty much showing that everything is fine.”
The fact that Apple’s iPhone advancements have stalled is another criticism leveled at the firm. In light of this, Reitzes found encouragement in Chief Executive Tim Cook’s remarks on the results call, which indicated that the company had a lot more in store for smartphone innovation.
“We know that iPhone sales aren’t so amazing right now, largely due to weakness in China, but we think form factor changes likely lie ahead – with a slimmer model and tweaks to the rest of the line-up likely, then followed by foldables down the road,” Reitzes stated. These adjustments may contribute to Apple’s unit sales growth and a further increase in average selling prices.
The performance of Apple Intelligence, the company’s artificial intelligence program that was meant to encourage smartphone upgrades, has also recently disappointed investors. Some were concerned that the features weren’t exactly connecting with customers after the limited deployment.
Accordingly, Krish Sankar, an analyst at TD Cowen, stated that Apple’s “comments indicating the initial regions where iPhone AI features have been rolled out are outperforming other [geographies] should support sentiment on the stock.”
Amit Daryanani of Evercore ISI emphasized Cook’s positive tone while discussing India. “Emerging markets are starting to become sizable enough that they are offsetting China headwinds,” Daryanani stated.
On Friday, just after 10 a.m. Eastern, Apple’s stock was up 1%.