Apple may report record iPhone sales/ Photo: shutterstock.com
Apple CEO Tim Cook and his team will be in the spotlight after the market closes on Jan. 29, when the company releases results for its fiscal first quarter ended Dec. 28. Cook said last year that the company "expects the first quarter to deliver record revenue in its history and in the history of the iPhone," Yahoo Finance recalls.
However, Apple, like many other companies in the tech industry, is facing a global memory shortage caused by the massive construction of AI data centers around the world, driving up component prices. This could put pressure on Apple's profits or force the company to raise iPhone prices in the coming months, notes Yahoo Finance.
What's being said on Wall Street as we await the report?
- The consensus forecast calls for iPhone revenue growth of 13%, but such a pace is rare for Apple, notes D.A. Davidson analyst Gil Luria. He says that could create a challenging environment for the company in the future, which will be expected to continue similar growth. "Without a truly compelling unveiling of a Siri update in September or a long-awaited foldable iPhone, Apple could be laying the groundwork for a revenue decline as soon as a year from now," Luria told MarketWatch.
- Risks for Apple are posed by the continuing shortage of memory in the AI industry: both data centers and manufacturers of consumer electronics use a type of memory DRAM (dynamic RAM), writes Yahoo Finance. According to Reuters, Apple's competitor Samsung has raised the cost of chips by 60% due to the shortage.
Investors are underestimating the potential impact of the memory shortage on Apple's earnings, according to Morgan Stanley's Eric Woodring. "Memory price increases have become more pronounced since last year - for context, NAND flash memory prices are expected to rise 55-60% quarter-over-quarter this quarter (instead of the 15-25% expected a month ago). Mobile DRAM memory price increases are now expected to be 53-58%," he wrote.
The analyst expects Apple to raise prices on its upcoming iPhone 18 lineup by $100, which would keep its FY 2027 earnings estimates unchanged. However, even though Morgan Stanley is now factoring high memory prices into its estimates, Woodring doesn't think they will significantly impact Apple's first-quarter earnings.- Apple has never faced such a memory crisis in its history, Janus Henderson senior analyst Sean Bucky told Bloomberg. Higher product prices carry the risk of lower demand. In an uncertain memory market, a clear understanding of how rising costs will affect profits is critical. The analyst believes that of all the "Magnificent Seven" companies, Apple looks the most resilient, thanks to its large base of real users and stable recurring service revenues.
What about the stock
In anticipation of the report, Apple shares gained 1.2% in early trading on January 29, but then lost all growth amid a stock market sell-off. The company's stock is now trading 9% below its December peak, which was reached after reports of high demand for the iPhone 17.
A few days before the report, JPMorgan analyst Samik Chatterjee raised his target price on the stock to $315, which implies upside of 22%, and reiterated his recommendation to buy it. "Apple has long-term contracts with suppliers and the scale of the company will allow it to buy components at more favorable prices than other OEMs," Chatterjee told Barron's. He expects Apple's results to confirm the company's "robustness" in a difficult economic environment.
What the market expects from the report of ArpleAccording to the forecast of FactSet, revenue from iPhone sales will amount to $78.2 billion, which is 13.1% more than a year earlier. The company's current quarterly record in this segment, $71.6 billion, was set at the end of 2021.According to analysts surveyed by LSEG, Apple is expected to report a 13.8% increase in iPhone sales in its fiscal first quarter. That would be the strongest growth in more than four years, Reuters writes. Analysts surveyed by Bloomberg estimate that for the quarter Apple will report total revenue of $138.4 billion.That's better than the same period last year by 11.3%, Yahoo Finance writes.
This article was AI-translated and verified by a human editor
