Apple (NASDAQ:AAPL) headed into its fiscal 2021 very first quarter with expectations that are higher from investors. The highlight of Apple’s quarter was the launch of the iPhone 12, the tech titan’s first 5G smartphone. Investors anticipated strong sales as wireless carriers force their 5G networks and build excitement around the new iPhones. All signs suggest Apple’s delivered on those expectations.
Here are three of the most noteworthy advancements bolstering Apple’s stock heading into its earnings report later on this month.
1. You still need to wait forever to get an iPhone 12 Pro
It has been above 2 weeks since Apple introduced the iPhone 12 Pro, and customers buying nowadays still need to wait a maximum of three months for delivery. Which should be forever in the age of next-day shipping. By comparison, it took only six weeks for iPhone eleven demand to reach equilibrium with supply last year, based on Credit Suisse analyst Matthew Cabral. The Apple iPhone 12 Pro observed from an angle.
The regular iPhone twelve as well as the iPhone twelve Mini are much more being sold both in-store and for immediate delivery. Which suggests Apple better see an improved average selling price (ASP) for the iPhone when it announces its first-quarter results.
Apple is reportedly ramping up production for the iPhone twelve in the very first half of 2021. Coupled with other factors suggesting strong iPhone sales for the quarter, the taller ASP should lead to iPhone revenue significantly outperforming. And viewing iPhone accounts for 50 % of revenue, and typically closer to 60 % in the very first quarter, which need to have a meaningful influence on its revenue versus expectations.
2. Suppliers are posting 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, according to Bloomberg.
Foxconn’s outperformance is also in line with the greater-than-expected need for the iPhone twelve Pro. The business enterprise is the premium supplier of the high end devices.
Meanwhile, Dialog Semiconductor raised its fourth quarter revenue perspective from a range of $380 million to $430 million to between $436 million and $441 million, Barron’s reports. The chipmaker cited increased need for 5G chips as the main reason. Considering Apple accounts for the vast majority of the revenue of its, it’s a very good bet those chips are actually going in iPhone 12s.
And also for late December, Wedbush analyst Daniel Ives said his Asia source chain checks “have now exceeded even 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 the annual new year of its update. In the week between Christmas Eve and New Year’s Eve, iOS computer users spent $1.8 billion in the App Store. That is up twenty seven % from year that is previous, as well as an acceleration from the sixteen % growth in sales in the same period in 2019. The company also recorded $540 million in sales on New Year’s Day, up nearly forty % from year that is previous. Those numbers suggest a good deal of new iPhones underneath the tree this year.
Furthermore, it bodes very well for Apple’s all-important services segment — its fastest-growing and highest-margin business. The App Store is Apple’s most profitable service, generating gross profits well above the membership services of its like Apple Music or perhaps Apple TV. So outperformance on that front must cause 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]… forty [basis points] in advance of consensus at $14.78 [billion].” It’s very likely, however, that more potent App Store sales make the perfect indication of more potent sales of Apple’s other services.
It looks like the iPhone supercycle could be a reality this year based on the first results we’ve spotted as well as other hints at need that is intense . And that’ll bolster Apple’s entire business — and the FAANG stock — when it reports the complete results of its on Jan. 27.