2024-02-01 18:45:08 ET
Summary
- Apple Inc. walks away from its strongest quarter of the year with another close brush with year-over-year declines. Despite the double-beat on modest expectations, demand risks are prevailing.
- Apple's increasing exposure to external impacts on its core consumer end-market, spanning macroeconomic, geopolitical and regulatory challenges, have continued to worsen with limited near-term respite.
- Increasing execution woes ahead remain an overhanging multiple compression risk for the stock.
Apple Inc.’s ( AAPL ) trailing in market cap to big tech peer Microsoft Corporation ( MSFT ) in the new year is a telling tale of weakening investors’ confidence. Despite Apple’s unmatched check-book and balance sheet strength, its relatively weaker growth outlook to peers basking in the surge of AI opportunities is adding pressure to the stock’s performance. This is corroborated by Apple’s latest fiscal Q1 2024 results . Although they outperformed market’s expectations, Apple barely escaped a second consecutive year of holiday quarter declines. The results continue to highlight Apple’s struggles in accommodating diverse consumer market dynamics in the face of lingering macroeconomic uncertainties at home, emerging China-specific headwinds, and regulatory challenges in Europe.
The tepid December quarter results also diverged from Apple’s historical trends, where devices benefited from a loyal, price-inelastic fanbase eager for upgrades, while services complemented monetization of its massive installed-base. Specifically, iPhone 15 sales remained moderate relative to its predecessor, with in line sequential growth as in prior holiday seasons despite pent-up demand in the December quarter stemming from supply constraints during the series’ debut in September....
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For further details see:
Apple's Fiscal Q1 2024 Quick Takes: The Moment Of Truth