Apple's Q3 2024 Earnings: AI Ambitions Amidst China Challenges

Apple set to report fiscal third-quarter earnings after the bell

Apple's third quarter, which ends in June, is traditionally the company's slowest quarter of the year by sales. This year, the "main event" won't be Apple's earnings, wrote Barclays analyst Tim Long, it's what the company says about the September quarter, which is nearly one-third over. Here's what Wall Street expects from Apple, according to LSEG consensus estimates: Here are estimates for Apple's major product lines, according to StreetAccount: While Apple doesn't provide official guidance, it gives investors a number of data points that speak to how the September quarter is shaping up. The company typically releases new iPhones in September, but those revenues usually fall primarily in the December quarter. "After an almost two-year period with little to no upward estimate revisions, we finally see a better outlook coming for the September quarter," Long wrote in a note last month. Investors will be keen to hear how Apple CEO Tim Cook talks about Apple Intelligence, its long-awaited artificial intelligence play that uses the company's own chips in servers and devices, instead of expensive Nvidia-based cloud computers. Apple revealed Apple Intelligence in June, and the first preview version of some features was released earlier this week. It isn't likely to be material to Apple's bottom line yet, but could boost "late cycle" demand for high-end iPhone 15 models that can run the service, Long wrote. Some analysts are looking at Apple's capital expenditures, which have been skyrocketing at rivals as they assemble massive server farms for AI. But Apple's strategy to use its own chips in servers appears to be a lower-cost approach. "Edge AI is in very early stages, has lower capex needs, and offers faster monetization potential through consumer hardware upgrades, which we think makes Apple stock particularly attractive," Raymond James analyst Srini Pajjuri wrote in a note in July. JPMorgan analyst Samik Chatterjee expects Apple to reassure investors that the coming iPhone replacement cycle will include better-than-expected revenue, thanks to AI. He raised his price target on the stock to $265 last month and has an overweight rating. "The revenue upside, in turn drives our expectations for EPS upside, which is likely to lead to consensus revisions for full-year earnings, and partly ease investor concerns around a premium valuation multiple," Chatterjee wrote. Apple previously told investors to expect modest overall growth in the fiscal third quarter, with a stronger "double-digit" increase in sales in its iPad division, partially due to the release of new iPad models in May. The company also said to expect roughly 14% growth in its profitable Services division, which covers products ranging from iCloud subscriptions to hardware warranties. Apple's China performance will be under scrutiny, wrote Bank of America Securities analyst Wamsi Mohan, after sales fell 8% on an annual basis in the second quarter in the face of increased competition from native companies like Huawei. "Although aggressive promotion during 618 shopping holiday helped improve iPhones sales," market estimates from IDC show Apple's sales declined while the Android market grew in China, wrote Citi analyst Atif Malik in a July note.

Apple reports results after the bell. Here's what Wall Street is watching

Apple's fiscal third-quarter earnings after the bell Thursday mark the next big test for a market struggling to recover from a recent tech wreck. Analysts forecast earnings to come in at $1.35 per share, and revenues to hit $84.53 billion for the period, per LSEG. iPhone sales are expected to reach $38.64 billion and decline more than 2% year over year as the company grapples with a stretch of stagnant growth. AAPL YTD mountain Shares performance this year That makes guidance the most critical component of Apple's print, especially as it readies for what some analysts are calling the most significant upgrade cycles in years this September, driven by new AI features dubbed Apple Intelligence. "We expect iPhone commentary to be the key catalyst this quarter with bullish statements about iPhone 16 expectations and continued stability in China likely to drive shares higher," said Evercore ISI's Amit Daryanani, who has an outperform rating. "We think the AI features coupled with a sizable portion of the base up for refresh should drive an iPhone Super Cycle in the Dec-qtr and through FY25." Barclays analyst Tim Long, who has a neutral rating on Apple, referred to the September guide as the "main event" that should determine share performance. He lifted his estimates for the September quarter but retained a neutral rating on shares given the stock's recent run. Long also echoed concerns the new iPhone won't be enough to fuel a "meaningful" upgrade cycle to support the premium. "We believe the stock has already run in anticipation of iPhones bottoming and the upcoming ramp of AI features," he wrote. AI-fueled upgrade cycle Apple's September quarter is expected to include about a week of new iPhone sales. This should enable iPhone revenues to return to growth, said Evercore ISI's Daryanani. The delayed launch of the new AI features should also extend in this cycle, some analysts say. That push-out could bode well for the stock and create a period of "sustained growth" versus a strong cycle and "digestion" period, said Bernstein's Toni Sacconaghi. To be sure, several Wall Street analysts have boosted their price targets in recent weeks, citing AI tailwinds. JPMorgan's Samik Chatterjee upped his target to $265 from $245 and placed a positive catalyst watch on shares. The revision reflect roughly 19% upside from Wednesday's close. Revenue upside from this opportunity should fuel revisions to full-year earnings and "ease investor concerns around a premium valuation multiple," he added. Baird's William Power upped his target to $240 from $200 a share, reflecting 8% upside from Wednesday's close. He estimates that every addition 10 million iPhone units could contribute $9 billion in revenue, or 12 cents to 2025 EPS estimates. "Following years of slowing upgrade rates, including new lows for AT & T and Verizon this week, we believe Apple Intelligence could provide a much-needed upgrade catalyst, boosting revenue and EPS growth meaningfully," he wrote in a recent note to clients. Wall Street will also keep a close watch on China sales following an 8% decline during the second quarter. Analysts warn that ongoing share losses in China to Huawei could hurt iPhone revenues. "While Greater China sales remain sluggish, mainland China iPhone sales have been stronger than expected and we are encouraged by iPhone demand picking up in emerging markets," said Raymond James analyst Srini Pajjuri.

Live updates: Apple investors watching iPhone sales in China ahead of earnings today

Apple is on deck to report fiscal third-quarter earnings after the closing bell on Thursday. Analysts are feeling more positive about the iPhone-maker's results over the past quarter, despite headwinds earlier this year stemming from weak demand and rising competition in China. Investors will be on high-alert for updates on the firm's success in China, the services side of its business, and Apple's key projects. That includes Apple Intelligence, its coming AI software, and the iPhone 16, which is set to be released this fall.

Apple's quarterly profit beats forecast, pins hopes on AI as China sales falter - Times of India

Apple Inc reported a strong financial performance for the June quarter, with a profit of $21.4 billion on revenue of $85.8 billion, marking a new record for the period and a 5% increase from the previous year. CEO Tim Cook expressed enthusiasm for the company's upcoming AI-powered tools, collectively known as Apple Intelligence, which are expected to drive user engagement and device sales. In China, a critical market for Apple, sales continued to decline, dropping 7% from the previous year. This decline, though concerning, was less severe than in the previous quarter. Despite these challenges, Apple maintains a strong financial position, with quarterly earnings per share at $1.40, above Wall Street estimates. Sales in other segments, including the Mac and iPad, showed growth, while the wearables segment saw a slight decline. iPhone revenue slightly declined to $39.3 billion compared to the same quarter last year, while the company experienced solid growth in the iPad segment, generating $7.2 billion in revenue. Apple also reported a new high in active devices across all geographic regions, although specific figures were not provided. Analysts weighed in on Apple's AI strategy, with Emarketer analyst Jacob Bourne noting that the company has tied its AI efforts to core business components, particularly the iPhone. The effectiveness of Apple's AI investments will primarily be measured by device sales and potential growth in subscription revenue. As the company prepares to launch its AI-powered features, the market eagerly awaits the impact on iPhone demand and overall performance. Apple's shares experienced a minor uptick of 0.5% in after-hours trading following the earnings report. As the tech giant gears up to make its mark in the AI space, investors and industry experts will closely monitor its progress and the reception of its new AI-driven offerings. Looking ahead, Apple plans to integrate various AI features in its products, including making its virtual assistant Siri smarter. These features, part of a free software update expected in the autumn, will initially be available on premium iPhone models equipped with a special AI chip. (With inputs from agencies) The TOI Business Desk is a vigilant and dedicated team of journalists committed to delivering the latest and most relevant business news from around the world to readers of The Times of India. The primary focus of the TOI Business Desk is to keep a watchful eye on the global business landscape, covering a wide spectrum of industries, markets, economic trends, in-depth analysis, exclusive reports and breaking stories that impact businesses and economies. With a mission to provide valuable insights and updates, the desk ensures that TOI readers are well-informed about the ever-changing and dynamic world of commerce and can navigate the complexities of the business world.

Apple Inc. : Apple

Last night, the Apple brand published its third-quarter results for the year just ended. The figures weren't exactly stellar, but the outlook for the I.A. encouraged investors to remain confident. Apple's results were eagerly awaited to give the markets a sense of direction after the second half of July, which was complicated by financial doubts. Indeed, consumption is no longer very vigorous, China can't see the end of the tunnel, trade and political tensions are at a critical point and AI is not yet bringing benefits to everyone. Unfortunately, Apple has not worked miracles. The Cupertino-based group has exceeded analysts' expectations - albeit very low ones - but that's not enough to boost the share price of a company that already pays more than 30 times earnings, however technological it may be. In the meantime, despite average figures and a reversal of fortunes, Apple is relying on the future contributions of AI. Indeed, the earnings release highlights the Group's progress in this area right from the start, with this statement from CEO Tim Cook: "During the quarter, we were delighted to announce incredible updates to our software platforms at our Worldwide Developers Conference. This includes Apple Intelligence, a revolutionary personal intelligence system that places powerful private generative AI models at the heart of the iPhone, iPad and Mac. We look forward to sharing these tools with our users, and continue to invest significantly in innovations that will enrich our customers' lives, while emphasizing the values that drive our work. " It should be remembered, however, that Apple plans to partner with external suppliers such as OpenAI to integrate certain capabilities, a sign that the group is lagging behind on this technology. For the time being, Apple is unable to release its in-house tools, as it so much enjoys doing in general. Key figures for the quarter Sales rose in all geographic zones except China (-6.5%). As in the case of luxury goods publications, the Chinese have clearly reduced their spending. Apple is also facing stiff competition in the smartphone market, with Chinese manufacturers, notably Huawei, gaining ground. China is a significant country for Apple, accounting for 17.2% of sales. In terms of sales by segment, Apple saw a decline in iPhone sales for the second consecutive quarter (-1% to $39.29 billion), as well as in sales of connected objects such as the Apple Watch and Airpods earphones (-2.3% to $8.09 billion). Growth was driven by iPad tablets (+23.7% to $7.16 bn), services (+14.1% to $24.21 bn) and, to a lesser extent, Mac computers (+2.5% to $7 bn).

Apple sales see boost from AI features after uneven third quarter

Apple Inc. predicted that its new artificial intelligence features will spur iPhone upgrades in coming months, helping the company reemerge from a sales slowdown that has hit its China business especially hard. Chief Executive Officer Tim Cook, speaking on a conference call Thursday to discuss third-quarter results, said that upcoming Apple Intelligence features will provide a fresh reason for customers to buy new phones. "It will be a very key time for a compelling upgrade cycle," he told analysts on the call. The remarks followed generally upbeat third-quarter results that were marred by sluggish sales in China. Apple returned to revenue growth in the period, which ended June 29, with an increase of 5% to $85.8 billion. That beat the $84.5 billion analyst estimate. But sales from China fell 6.5% to $14.7 billion, missing the $15.3 billion projection from Wall Street. Apple's shares were virtually unchanged in premarket trading on Friday. They were down 0.1% at $218.10 at 4:56 a.m. New York time. The stock had gained 13% this year through the close, lifted by investors' hope that new artificial intelligence technology would help boost sales. The China results rekindled fears that Apple is losing ground in one of its most important overseas markets. The company is up against fiercer competition in the region, and the government has reined in the use of foreign technology in some workplaces. Chinese economic growth also has worsened. Apple attributed much of the decline to the impact of a strong dollar, saying that the underlying business in China is actually healthier than before. Three months ago, executives said the slowdown was less about an underperforming iPhone and more about weak sales of other products. "We do realize it's a very competitive smartphone market, but we feel we are doing quite well within the context of the broader economy," Chief Financial Officer Luca Maestri told Bloomberg Television's Emily Chang. Cook said during the call that Apple still has faith in the market. "I don't know how every chapter of the book reads, but we're very confident in the long term," he said.

What You Need To Know Ahead of Apple's Earnings Report

UPDATE -- Aug. 1, 2024: This article has been updated to reflect more recent analyst estimates and share price information, as well as news related to Apple Intelligence. Apple (AAPL) is set to report fiscal third-quarter earnings after the bell on Thursday, Aug. 1, with investors likely to be watching for sales results in the China region and updates related to artificial intelligence (AI). The iPhone maker is expected to report revenue of $84.44 billion, according to estimates compiled by Visible Alpha, which would represent about 3% growth from the year-ago period. Net income is projected to be $20.66 billion or $1.35 per share, an increase from the third quarter of 2023.

Apple revenue rises despite lull in global iPhone sales

The company's revenue hit nearly $85.8bn and iPad sales had a sudden surge, but Apple's also reported a drop in its iPhone sales in China. Apple has managed to beat analyst expectations in its latest quarter, with a revenue boost of 5pc and continued hype around its upcoming AI releases. The tech giant reported revenue of nearly $85.8bn in its fiscal third quarter of 2024 ending 29 June, beating analyst predictions by more than $1bn according to The Guardian. Apple also saw its net income increase to more than $21.4bn compared to roughly $19.9bn in the same period last year. Apple also managed to surpass expectations with the sale of its products, particularly the iPad which saw global sales surge by more than 23pc, reaching $7.16bn in the last quarter. Apple's iPhone sales dropped by less than 1pc to $39.3bn, but this drop was lower than analyst expectations. Apple beating analyst expectations is a positive result compared to other players in the tech sector, which have disappointed Wall Street investors this week. For example, Intel revealed plans to cut its global workforce by more than 15pc in an effort to reduce costs, after a disappointing financial quarter. Meanwhile, there continues to be hype around Apple's movement into the generative AI space, though Apple's EU customers were given some bad news earlier this year. CEO Tim Cook noted that the company revealed Apple Intelligence during the last quarter and he said this system will bring "powerful, private generative AI models at the core of iPhone, iPad, and Mac". "We very much look forward to sharing these tools with our users, and we continue to invest significantly in the innovations that will enrich our customers' lives, while leading with the values that drive our work," Cook said. The hype around Apple's AI plans appears to have negated the impact of the company's poor iPhone sales in China, which fell by more than $1bn compared to the same period last year. The Guardian reports that this drop was more severe than what analysts expected. Apple has been losing its dominance in China - a key market for the company - amid a massive growth in demand for Huawei smartphones. This contributed to Apple having a drop in quarterly revenue earlier this year. Find out how emerging tech trends are transforming tomorrow with our new podcast, Future Human: The Series. Listen now on Spotify, on Apple or wherever you get your podcasts.