Apple (AAPL, $146.77) was meant to be one of the highlights of a jam-packed earnings calendar this week. And despite what Wednesday's sluggish response in AAPL stock might suggest, Tuesday evening's report didn't disappoint.
In fact, Apple delivered what Wedbush analyst Dan Ives called a “gold medal” performance. The highlights:
- Revenue of $81.4 billion (+36% year-over-year) topped expectations for $77 billion.
- Profits of $1.30 per share (+100%) were well ahead of a $1.05 per share estimate.
- Gross margins of 43.3% topped Wall Street’s 41.7% estimate.
- iPhone sales reached $39.6 billion to top estimates by roughly $5.5 billion.
- Services revenue of $17.5 billion easily topped expectations for $16.3 billion.
“We essentially view this quarter as the second half and the start of the back stretch of the 5G supercycle and a ‘drop the mic’ quarter for Apple,” says Ives. The analyst rates the stock at Outperform (equivalent of Buy) and has a $185.00 price target on the stock, implying 26% upside over the next 12 months. “The outlook was healthy and clearly cautioned with chip shortage comments, a prudent and smart approach heading into its next iPhone launch in September.”
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"We believe this quarter is a great next step in driving this stock to a $3 trillion market cap over the next year as the Street further digests the numbers and pent-up demand story in Cupertino.”
AAPL stock was slightly lower in response, however, continuing a decent but hardly sterling year for shares. The stock is up 10% year-to-date, underperforming both the tech sector's 18% performance in 2021, as well as the S&P 500's 17% advance.
Ives highlights Asia’s role in the earnings beat, with China revenue up 58% year-over-year. The country will remain a key ingredient to Apple’s success going forward, he adds, estimating that it will be responsible for roughly 20% of iPhone upgrades over the next year, including when the iPhone 13 launches.
“Taking a step back, we believe based on our recent Asia supply chain checks that iPhone 13 demand will be similar/slightly stronger than iPhone 12 out of the gates which speaks to our thesis that this elongated "supercycle" will continue for Cupertino well into 2022,” he says.
Wall Street largely remains bullish on AAPL stock following the report. Among analysts surveyed by S&P Global Market Intelligence, 24 analysts call it a Strong Buy, another eight call it a Buy and seven say it's a Hold. Meanwhile, just one pro calls Apple a Sell, and two others deem it a Strong Sell.
-
Think Twice Before Getting a Credit Card Cash AdvanceA credit card cash advance can be a quick solution when you need emergency help with money. But you'll pay for the convenience with high interest and fees.
-
What is AI Worth to the Economy?The Letter Spending on AI is already boosting GDP, but will the massive outlays being poured into the technology deliver faster economic growth in the long run?
-
If You'd Put $1,000 Into UnitedHealth Group Stock 20 Years Ago, Here's What You'd Have TodayUNH stock was a massive market beater for ages – until it wasn't.
-
Tech Sells Off While Trump Stirs the Fed: Stock Market TodayWe've reached another important part of earnings season, though markets remain captivated by the president, the Fed, and interest rate policy.
-
Dow Retreats From a Record High: Stock Market TodayQuietly rising since April, Home Depot stock was conspicuously constructive Tuesday as high-profile tech names dragged equity indexes down.
-
Nasdaq Ends the Week at a New High: Stock Market TodayThe S&P 500 came within a hair of a new high, while the Dow Jones Industrial Average still has yet to hit a fresh peak in 2025.
-
Stocks Swing Lower as Eli Lilly, Fortinet Spiral: Stock Market TodayThe main indexes finished well off their session highs after a disappointing batch of corporate earnings reports.
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
Stocks Rally on Apple Strength: Stock Market TodayThe iPhone maker will boost its U.S. investment by $100 billion, which sent the Dow Jones stock soaring.
-
Dow Dives 542 Points on Soft Jobs Data: Stock Market TodayThe last day of a busy week ends with the first greater-than-1% move in either direction in more than a month.
