Apple’s Numbers Complete Trifecta

You could almost hear the collective sigh of relief after Apple (NASDAQ: AAPL) released its latest earnings report at the end of yesterday’s session. Investors have already found solace this week with solid results from Microsoft (NASDAQ: MSFT) and Facebook (NASDAQ: FB) helping to at least slow the wave of risk-off sentiment that’s rattled the equity markets. After a tough first quarter to the year, a broader market bounce back into the summer doesn’t look like it will be materializing anytime soon. 

The tech-heavy NASDAQ index fell to 52-week lows on Wednesday and while we’re still not out of dodge, the numbers from all three of the big techies will do much to give investors peace of mind into the weekend. We’ve covered the Microsoft and Facebook earnings already this week, so let’s dive into Apple’s. 

Good Numbers

For starters, they registered solid beats on both the top-line and bottom-line numbers. Q2 EPS came in at $1.52, well ahead of the $1.43 expected. On the revenue front, Apple’s quarterly number of $97 billion was also ahead of the consensus and up more than 8% year on year. Across the board, all their business units did well. Revenue from products led, with $77.5 billion alone coming from there. Up next was their iPhone revenue, at $50.6 billion. In terms of market pull, it doesn’t really get much better than Apple. 

In addition to the all-important beat, Apple’s management saw fit to raise their dividend by 5% while at the same time boosting their share buyback program by $90 billion. Either of these by themselves can be considered one of the most bullish signals management can give to investors, so the fact that they were delivered simultaneously speaks volumes. 

Apple’s CEO Tim Cook said with the release that “this quarter’s record results are a testament to Apple’s relentless focus on innovation and our ability to create the best products and services in the world”. Their CFO, Luca Maestri, added to the positive sentiment when he said “we are very pleased with our record business results for the March quarter, as we set an all-time revenue record for Services and March quarter revenue records for iPhone, Mac, and Wearables, Home and Accessories. Continued strong customer demand for our products helped us achieve an all-time high for our installed base of active devices. Our strong operating performance generated over $28 billion in operating cash flow, and allowed us to return nearly $27 billion to our shareholders during the quarter.”

A Ray Of Light

For investors and the wider market in general, this was a much-needed ray of light after one of the worst weeks for equities in a while. Dan Ives of Wedbush went so far earlier this week to say that the results from Microsoft and Apple "could dictate the path of tech stocks over the coming months. To this point, we are expecting strong numbers from both stalwarts Microsoft and Apple this week which would be much-needed good news for the tech sector in this white-knuckle time.” It’s safe to say he got his wish. 

With the week’s finish line in sight, both have delivered and investors are starting to dip their toe back into stocks as a result. The NASDAQ index ripped higher yesterday to finish up more than 3.5% on Wednesday’s close. It will be interesting to see if these gains are held into the weekend, and more importantly, into next week.

Getting Involved

For those considering getting involved with Apple, or adding to existing positions, their shares don’t come without risk. CEO Tim Cook made the point that the tech giant is “not immune” to challenges caused by the Russian invasion of Ukraine, as well as further COVID-related disruptions in China. CFO Luca Maestri warned that June’s revenue is likely to be impacted by supply constraints caused by COVID, and silicon shortages, with the value of the constraints between $4 billion and $8 billion, "substantially larger" than Apple saw in the March quarter.

Still, it was a good report, and exactly what Wall Street was looking for. But Apple shares were still down slightly in Friday’s pre-market session so let’s keep our fingers crossed and see if these numbers give investors the confidence they need to start buying again instead of just selling.