While Apple is forecasting a sales decline in the March quarter, it is upbeat about the rest of the calendar year with the launch of Apple Vision Pro and upcoming artificial intelligence news. Still, Apple stock fell Friday after the company's latest earnings report.
The Cupertino, Calif.-based company late Thursday reported better-than-expected December-quarter results but disappointed with its guidance.
In its fiscal first quarter ended Dec. 30, Apple's earnings rose 16% year over year to $2.18 a share while sales increased 2% to $119.6 billion. Apple cited healthy iPhone 15 sales and services growth for the outperformance. But sales in China dropped nearly 13% in the December quarter amid heightened competition from domestic smartphone makers.
For the current quarter, Apple guided to sales of about $90 billion, down 5% from the same period last year. However, Chief Financial Officer Luca Maestri said sales would be flat with the year-ago quarter if you factor out delayed fulfillment of iPhone orders last year because of Covid-related factory shutdowns.
Apple Stock Retreats After Report
On the stock market today, Apple stock dropped 0.5% to close at 185.85.
Also Friday, Apple began selling its Apple Vision Pro spatial computer after two weeks of preorders. The mixed-reality headset starts at $3,499. The device is only available in the U.S. for now but Apple plans to roll it out to other countries later this year.
On Thursday, Apple announced that more than 600 apps have been built specifically for the Apple Vision Pro. They include video games and applications for productivity, communications and entertainment.
On a conference call with analysts Thursday, Apple executives touted enterprise uses for the computer headset.
Companies such as Bloomberg, Nike, SAP, Stryker, Vanguard and Walmart are using Apple Vision Pro "to bring innovative spatial computing experiences to their customers and employees," Maestri said.
"From everyday productivity to collaborative product design to immersive training, we cannot wait to see the amazing things our enterprise customers will create in the months and years to come," he said.
Apple Hints At AI Developments
Also on the call, Chief Executive Tim Cook indicated that Apple has AI news brewing.
"Artificial intelligence (is an area) where we continue to spend a tremendous amount of time and effort and we're excited to share the details of our ongoing work in that space later this year," Cook said.
Rosenblatt Securities analyst Barton Crockett said Apple likely will add AI capabilities to its next iPhone.
"A muted AI storyline at Apple, vs. explosive developments elsewhere, has been a sentiment headwind for the shares," Crockett said in a client note. He rates Apple stock as neutral with a price target of 189.
Raymond James analyst Srini Pajjuri said generative AI features in the iPhone could help shorten replacement cycles for handsets. AI also could drive incremental services revenue, he said. Pajjuri rates Apple stock as outperform with a price target of 195.
Apple Stock Gets Price-Target Cut
Barclays analyst Tim Long reiterated his underweight rating on Apple stock and cut his price target to 158 from 160.
Apple has been on a "historically bad run" with revenue declines in four of the last five quarters, he said in a client note. And the first half of the year is looking down as well, Long said.
"We see nothing in the pipeline to help improve the numbers, which over time should pressure the multiple," Long said.
Apple stock has an IBD Composite Rating of 77 out of 99, according to IBD Stock Checkup. IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
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