Why investors rewarded Apple but fled Amazon, Google, Facebook after earnings

Tim Cook, chief government officer of Apple Inc., outdoors the Apple Fifth Avenue retailer in New York, US, on Friday, Sept. 16, 2022.

Jeenah Moon | Bloomberg | Getty Images

The causes diverse. Meta struggled with shrinking free money circulation because it continued its metaverse spending spree. Alphabet mentioned advert gross sales have been slowing as YouTube reported its first-ever income decline. And Microsoft was pressured by weak steerage and cloud income that missed expectations. Amazon missed income estimates and signaled a weak vacation quarter and narrowing income.

But Apple now seems much more steady than its friends, particularly as fears of a recession begin weighing on advert gross sales and potential vacation spending. It’s largely as a result of Apple depends on {hardware} and companies that persons are nonetheless shopping for.

Mac income was up 25% 12 months over 12 months, for instance. And whereas iPhone income missed estimates, it nonetheless rose 9.67% 12 months over 12 months. Services additionally popped 4.98% 12 months over 12 months, regardless of lacking analyst estimates.

And Apple managed this whereas the bigger cellphone and PC trade noticed massive declines. Worldwide smartphone shipments declined 9% through the third quarter, whereas Apple’s shipments elevated by 8%, regardless of its higher-priced gadgets, based on an estimate from analysis agency Canalys this week.

“Demand for premium devices remains intact,” wrote Cowen’s Krish Sankar in a observe Friday.

In quick, Apple’s enterprise stays sturdy, and demand for its merchandise stays excessive all over the world, even in rising markets, bucking downward traits for world smartphone gross sales from different manufacturers.

“Following Apple’s F4Q22 results, it remains our top pick and, we believe, will likely remain a relative safe haven for many as the macroenvironment remains highly uncertain and choppy,” Cross, of Credit Suisse, mentioned. Cross added that Apple’s outcomes confirmed the corporate continues to develop in each area it sells in, regardless of latest worth will increase and weakening shopper sentiment.

Apple’s quasi-guidance additionally was largely consistent with expectations, versus corporations akin to Amazon that steered a weaker vacation quarter.

Apple CFO Luca Maestri mentioned complete year-over-year income would develop in December but slower than the 8.1% development through the September quarter.

But the stat nonetheless confirmed many analysts that Apple would proceed its gross sales development streak that is been in impact for the reason that begin of the pandemic. Keep in thoughts, subsequent quarter’s development must be off an enormous $124 billion base of gross sales from final 12 months’s December quarter.

However, the best way that Apple now provides steerage by information factors leaves numerous room for interpretation, and a few analysts imagine that the present quarter may very well be worse than the market is pricing in. At least one even thinks Apple’s information level suggests a down quarter.

“Apple is essentially saying revenues are going to be down next quarter,” Bernstein’s Toni Sacconaghi mentioned on CNBC’s “Squawk Box” on Friday, declaring that Apple’s December quarter has an additional week this 12 months.

Sacconaghi mentioned a few of Apple’s Big Tech friends additionally appeared to have points controlling prices, whereas Apple stays pretty lean and worthwhile.

While Apple CEO Tim Cook informed analysts that the corporate was seeing the results of inflation on its prices, significantly in logistics, it additionally has managed the chip provide scarcity nicely and mentioned Thursday that it had no silicon shortages through the quarter.

Apple is not resistant to the promoting slowdown hitting Meta and Alphabet, although Cook mentioned Thursday that adverts are a really small a part of Apple’s companies enterprise.

Add all of it up, and it is potential to see why some analysts contemplate Apple to be immune to a recession.

“Overall, our viewpoint remains consistent that Apple remains recession resilient given its products, services and wearables businesses,” wrote Piper Sandler’s Harsh Kumar.

— CNBC’s Michael Bloom contributed to this report.

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