Apple (NASDAQ:AAPL) headed into its fiscal 2021 first quarter with expectations which are higher from investors. The highlight of Apple’s quarter was the launch of the iPhone 12, the tech titan’s very first 5G smartphone. Investors anticipated strong sales as wireless carriers push their 5G networks and build excitement around the brand new iPhones. All signs indicate Apple’s delivered on those expectations.
Here are 3 of the most noteworthy advancements bolstering Apple’s stock heading into its earnings report later on this month.
1. You still must wait indefinitely to get an iPhone 12 Pro
It has been approximately two weeks since Apple introduced the iPhone twelve Pro, and clients purchasing nowadays still need to wait as many as 3 months for shipping. That might as well be forever in the era of next day shipping. By comparison, it took just 6 weeks for iPhone 11 interest to achieve equilibrium with supply last year, as reported by Credit Suisse analyst Matthew Cabral. The Apple iPhone twelve Pro noticed from an angle.
The regular iPhone 12 and also the iPhone twelve Mini are much more readily available both in store and for instantaneous shipping. Which implies Apple must see a better average selling price (ASP) for the iPhone when it announces the first quarter results of its.
Apple is reportedly ramping up production for the iPhone 12 in the first half of 2021. Coupled with other things suggesting very strong iPhone sales for the quarter, the taller ASP should lead to iPhone revenue significantly outperforming. And considering iPhone accounts for 50 % of revenue, and typically closer to 60 % in the earliest quarter, that need to have a significant impact on its revenue versus expectations.
2. Suppliers are publishing huge earnings numbers
Apple’s biggest iPhone assembler, Foxconn, announced record revenue for the month of December. The Taiwanese company, which trades as Hon Hai Precision, reported sales of 713.8 billion New Taiwan dollars (aproximatelly $25.5 billion) for December, and quarterly revenue of NT$two trillion. The beat expectations of NT$1.8 trillion, based on Bloomberg.
Foxconn’s outperformance is additionally in line with the greater-than-expected demand for the iPhone 12 Pro. The company is the exclusive supplier of the high end products.
Meanwhile, Dialog Semiconductor raised the fourth quarter revenue outlook of its from a range of $380 million to $430 million to between $436 million and $441 million, Barron’s reports. The chipmaker cited increased requirement for 5G chips as the reason. Considering Apple accounts for the vast majority of its revenue, it’s a really great bet those chips are going in iPhone 12s.
And for late December, Wedbush analyst Daniel Ives said his Asia supply chain checks “have today exceeded actually our’ bull case scenario'” in a note to investors.
3. New files in the App Store
Apple reported record gross sales for its App Store in its annual brand new year update. In the week in between Christmas Eve and New Year’s Eve, iOS computer users spent $1.8 billion in the App Store. That is up 27 % from year that is previous, as well as an acceleration from the sixteen % growth in sales in the exact same time of 2019. The company also recorded $540 million in sales on New Year’s Day, up almost 40 % from year that is previous. Those numbers suggest a lot of new iPhones under the tree this season.
What’s more, it bodes well for Apple’s all important services segment — its highest-margin and fastest-growing business. The App Store is Apple’s most profitable service, generating yucky earnings well above the subscription services of its as Apple Music or maybe Apple TV. So outperformance on that front must lead to better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we keep the majority of our December quarter Apple Services forecast unchanged, the latest App Store data would imply December quarter Services revenue of $14.84 [billion]… 40 [basis points] in front of consensus at $14.78 [billion].” It’s very likely, nonetheless, that more potent App Store sales are a great indication of stronger sales of Apple’s other services.
It looks as the iPhone supercycle could be a reality this year depending on the first results we have seen and other hints at intense need. And that’ll bolster Apple’s whole company — and the FAANG stock — in the event it reports the full results of its on Jan. twenty seven.