Apple Reports Quarterly Earnings Next Thursday
Curiously, Apple (NASDAQ: AAPL) did not report earnings this week alongside the other big tech names. Apple’s call highlights what will be a busy week for the markets. The call comes on Wednesday as the Fed will release its latest numbers for inflation in the US economy. Many are anticipating another 25 basis point hike to the interest rates. Some believe that the Fed could be coming to the end of its rate hiking cycle.
Apple usually sets the tone for earnings season. The world’s largest company by market capitalization is typically one of the first big tech companies to report. This quarter, it is the last, and with such strong reports from several of the other big tech companies, the pressure is on for Apple.
Most analysts are expecting a slight year-over-year decline in revenues. Apple already released a report that stated that MacBook sales are down by more than 40%. The company is incredible at front-running news like this to avoid severe punishment for its stock. In recent quarters, Apple has done work representing several boosts for the price of its stock. Could the same be in store for this quarter?
Can Apple Save the Stock Market?
If there is a positive move from Apple, it very well might bring other tech companies higher. When we talk about saving the stock market, it is a little tongue-in-cheek. But Apple does have a chance to set re-build momentum into an emerging bull market. Apple’s earnings could prove to be a tipping point for US equities.
Apple is the largest weighted component of both the NASDAQ and the S&P 500. It is also a significant part of the Dow, although the price-weighted nature of this index prevents Apple from dominating it. Any positive move by Apple typically results in a similar move for the broader markets.
There are some promising signs for Apple though. Its business operations are mostly consumer-facing and we know from Visa (NYSE: V) and Mastercard (NYSE: MA) that consumers are still spending as much as ever before. Aside from the decline in computer sales, Apple usually either meets or exceeds expectations for its consumer-facing products.
More important than ever is Apple’s software industry. This segment has provided a nice boost to Apple’s bottom line. Software and apps are a fairly high-margin industry so it is easy to see why Apple continues to focus on becoming a software provider.
The Bottom Line: Apple Earnings Preview
Apple usually finds a way to impress shareholders. It could be an earnings beat or a massive share buyback plan. The company has been saying for months now that Q1 revenue will sharply decline, so this is likely already baked into the stock’s price. Will CEO Tim Cook mention AI or artificial intelligence at all? Microsoft ($415.5|0.45%) and Meta Platforms ($502.3|2.48%) mentioned AI shamelessly in their calls and both stocks are up big for the week.
It could be a weak quarter for Apple, there’s no denying that. As long as its software revenue and margins continue to rise, I think investors are already looking toward a transition from hardware to software services. Look for Apple to discuss new products and services, a potential buyback, and a dividend raise, to distract investors from what could be a decline in consumer demand for high-end products.