Apple's Stock Gains Momentum as Wall Street Warms Up and Apple TV+ Expands

Wall Street is Warming Up to Apple Stock Again, Here's Why

Plus, fiscal 2023 marked a rare setback for Apple, with negative revenue growth across all four quarters - a first since the pre-iPhone era of 2001. Meanwhile, its FAANG peers soared, rebounding as a group from the 2022 market crash and winning investor confidence. Faced with fierce competition in the smartphone space and a perceived AI shortfall, several high-profile analysts downgraded AAPL stock to start this year. However, despite the initial skepticism, the tide is turning. Wall Street analysts are starting to warm up to Apple once again, with optimism on the rise toward the tech giant. Here's a look at what's driving this renewed bullish sentiment. About Apple Stock Founded in 1976, Apple Inc. (AAPL) is the unrivaled leader in tech innovation. Commanding a staggering market cap of $3.5 trillion, this innovative powerhouse consistently redefines technology standards with its iconic products, such as the iPhone, iPad, Mac, AirPods, Apple Watch, and the revolutionary Apple Vision Pro. In addition to its impressive array of tech products, Apple recently made its long-awaited foray into the AI landscape with "Apple Intelligence." This strategic move propelled the stock to unprecedented levels. The mega-cap stock soared to a new all-time high of $237.23 on July 15, fueled by bullish analyst notes over Apple's AI ambitions. After starting the year as a significant underperformer among its Big Tech peers, AAPL stock is firmly back on positive ground on a YTD basis. The stock has now rallied 16.7% since the start of 2024, closing its performance gap with the broader S&P 500 Index ($SPX). With a decade-long streak of increasing dividends, the company remains committed to rewarding its shareholders. On May 16, the tech giant announced a 4% bump in its quarterly dividend to $0.25. Its annualized dividend of $1.00 offers a 0.44% dividend yield. Apple also announced a historic $110 billion share buyback plan alongside its Q2 earnings, setting a new record in the process. Following the company's fiscal Q2 earnings report after the close on May 2, which exceeded Wall Street's predictions on both the top and bottom lines, Apple shares jumped almost 6% in the subsequent trading session. The tech giant reported revenue of $90.8 billion for the quarter, reflecting a 4.3% decrease from the same period last year, but slightly above the consensus estimate of $90.5 billion. This continued revenue drop is largely due to a significant 10% year-over-year decline in iPhone sales, which indicates weakened demand for Apple's latest smartphone model, launched last September. During the quarter, the company posted EPS of $1.53, sailing past estimates by a 1.5% margin. Reflecting on the Q2 performance, CFO Luca Maestri said, "Thanks to very high levels of customer satisfaction and loyalty, our active installed base of devices has reached a new all-time high across all products and all geographic segments, and our business performance drove a new EPS record for the March quarter." Looking forward to Q3, management forecasts total revenue growth in the low single digits year over year, while the services business is expected to deliver double-digit revenue growth. The company is expected to report its fiscal Q3 earnings results on Thursday, August 1. Analysts tracking Apple expect the company's profit to reach $6.59 per share in fiscal 2024, up 7.5% year over year, and climb another 12.1% to $7.39 per share in fiscal 2025. Apple's AI Breakthrough On June 10, Apple joined the AI race by unveiling "Apple Intelligence" at the Worldwide Developers Conference (WWDC). This initiative integrates ChatGPT from OpenAI to bolster iPhone virtual assistant Siri's functionality, a significant step in Apple's bid to close the gap with AI frontrunners like Microsoft and Alphabet (GOOGL). The upcoming software updates promise not only to revamp Siri with enhanced capabilities and a more engaging persona, but also to introduce creative tools such as real-time emoji creation, dubbed "Genmojis." The consumer tech company's move into on-device AI is closely watched, because analysts will be looking for the rollout to spark a much-needed uptick in iPhone sales when new models are launched - expected this September. What Do Analysts Expect For Apple Stock? Despite the skepticism surrounding AAPL stock initially this year, the company's strategic announcement of an AI-enabled smartphone has significantly boosted analyst confidence in the stock. On July 15, Morgan Stanley (MS) listed the company as a "top pick" and also raised its price target to $273. According to the investment bank, Apple is set to embark on a record-breaking multi-year upgrade cycle fueled by the introduction of Apple Intelligence. Supported by the company's AI endeavors, Morgan Stanley analysts foresee Apple potentially selling close to a whopping 500 million iPhones in the next two years. Additionally, on the same day, Loop Capital analyst Ananda Baruah awarded Apple a "Buy" rating and set a price target of $300, marking a new Street-high target for the stock. The analyst sees Apple becoming the preferred hub for generative AI, echoing its historical prowess in capturing market trends with products like the iPhone and iPod. Overall, AAPL stock has a consensus "Moderate Buy" rating. Of the 30 analysts covering the stock, 20 advise a "Strong Buy," three say it's a "Moderate Buy," six have a "Hold" rating, and the remaining one recommends a "Strong Sell." This optimistic consensus marks a notable shift from three months ago, with the percentage of "Buy" or better ratings increasing from 66% then to 76% now. Even though the stock currently trades nearly flat with its average analyst price target of $224.09, Loop Capital's Street-high target of $300 suggests that AAPL could rally as much as 33.6% from current levels. On the date of publication, Anushka Mukherji did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Wall Street Lunch: Apple+ In Talks To Boost Movie Collection (undefined:AAPL)

Domino's Pizza sinks after missed revenue estimate and suspended guidance. Listen below or on the go on Apple Podcasts and Spotify AppleTV+ looks to expand its library of studio titles. (0:16) Amazon Prime Day notches record numbers. (1:00) Tesla slides into top 10 in EU registrations. (4:34) This is an abridged transcript of the podcast. Our top story so far. Apple (NASDAQ:AAPL) has held discussions with Hollywood studios about licensing more of their movies to boost its Apple TV+ streaming service. Bloomberg says Apple TV+, which received 72 Emmy nominations for its shows such as "The Morning Show," "Palm Royale," "Slow Horses," and "Masters of the Air," is attempting to increase its library of content both in the U.S. and internationally. Apple has never disclosed how many subscribers it has for its streaming service, but recent estimates have put it around 25 million. Apple has said that it has more than 1 billion subscriptions across its platform, which includes those who subscribe to Apple News+, iCloud, Apple Music, and more. These subscriptions live as part of Apple's Services segment, which generated $23.9 billion in revenue for the most recent quarter. Also in the megacap arena, Amazon (AMZN) announced that Prime Day 2024 generated record sales and more items sold during the two-day event than any previous Prime Day event. Millions more Prime members shopped the two-day shopping event compared to Prime Day 2023. Amazon said: "Members shopped deals from popular brands like Sol de Janeiro, Apple, Dyson, and Ring, as well as small businesses, including TruSkin, ALOHA, Blueland, and Native Pet, with members in the U.S. able to shop more deals on small business products than ever before." Notably, independent sellers sold more than 200 million items during the Prime Day event. In today's trading, a rebound in tech and growth premarket was short-lived. Solid results from Taiwan Semi (TSM) on AI demand eased the panic in the chip sector, but there was still some selling pressure. After starting higher, the Nasdaq (COMP.IND) is down 0.5%. It's coming off its worst session since 2022. On the economic front, the July Philly Fed index jumped more than expected, coming in at 13.9 from 1.3 in June. The consensus was for a small rise to 2.7. New orders were at 20.7, up sharply from the prior reading of -2.2. And weekly initial jobless claims rose by +20,000 to 243,000, more than the 229,000 expected and 223,000 in the previous week. Ian Shepherdson, economist at Pantheon Macro, said the pick-up in jobless claims "was driven by a combination of shutdowns at auto plants and disruption caused by Hurricane Beryl" and noted that the Philly Fed numbers were "encouraging, with the shipments, new orders, delivery times, and employment components all rising sharply." Among active stocks today, Domino's Pizza (DPZ) sank after it missed revenue estimates and suspended guidance on international store counts. Revenue increased 7.1% year-over-year to $73.1 million during the quarter, primarily due to higher supply chain, U.S. franchise advertising, and U.S. franchise royalties and fees revenues. Total domestic store comparable sales growth was +4.8% vs. +4.9% consensus. Domino's also said it expects it will fall 175 to 275 stores below its 2024 goal of 925+ net stores in international, primarily as a result of challenges in both openings and closures being faced by Domino's Pizza Enterprises, one of its master franchisees. It is temporarily suspending its guidance of 1,100+ global net stores "until the full effect of DPE's store opens and closures on international net store growth are known." D.R. Horton (DHI) narrowed guidance for both revenue and home closings. But it also announced a new $4 billion stock buyback program. The homebuilder now expects fiscal 2024 revenue of ~$36.8 billion to $37.2 billion, compared with its earlier forecast of $36.7 billion to $37.7 billion. The consensus is $36.9 billion. Guidance for home closings was revised to 90,000-90,500 from its previous guidance of 89,000-91,000. Cash flow from homebuilding operations is still expected to be ~$3 billion. TD Cowen upgraded Fortinet (FTNT) to Buy from Hold, citing "solid" channel checks. Analyst Shaul Eyal says that channel checks suggest that a bottoming cycle is occurring in security appliances. In other news of note, battery-electric cars accounted for 14.4% of the European car market in June, down from 15.1% the previous year. At the same time, hybrid-electric vehicles increased their market share to 29.5% from 24.4%. The combined share of gas and diesel cars fell to 47.1% from 49.6%. In the first half of 2024, total car registrations increased by 4.5%, reaching nearly 5.7 million units. But registration volumes remain relatively low (-18%) compared to pre-pandemic levels. The bloc's largest markets all showed positive but modest performance, with Spain, Germany, Italy, and France all recording growth. The year-to-date market share leaders in Europe by registrations are Volkswagen Group (OTCPK:VLKAF) at 26.0%, Stellantis (STLA) at 18.0%, Renault Group (OTCPK:RNSDF) at 10.9%, Toyota Motor (TM) at 7.8%, and Hyundai (OTCPK:HYMTF) at 7.8%. Rounding out the top 10 are BMW (OTCPK:BMWYY) at 6.3%, Mercedes-Benz (OTCPK:MBGAF) at 5.0%, Ford Motor (F) at 2.9%, Volvo Cars at 2.7%, and Tesla (TSLA) sliding in at 2.2%. Of note, Tesla's market share in Europe has dropped slightly this year, per the ACEA registration data. And in the Wall Street Research Corner, we are just past the peak of broader market returns, and caution is warranted going into the historically low-flow month of August. That's according to Goldman Sachs tactical strategist Scott Rubner. July 17 "typically marks the end of summer BBQ/pool/pirate themed party, for the S&P 500 since 1928," Rubner says. "The S&P has hit 38 new all-time highs, on pace for the 2nd most closing highs in ~100 years, only 1995 is shaping up to be stronger." "Blow-off top completed (up 13 in 15 sessions), summer slipper engaged," he said. "The pain trade is no longer higher from here. I am not buying the dip." "July, Friday, option expiration is a good barometer to unclench this massive dealer long gamma position, and the market will be able to move more freely into lower trading liquidity and vacations starting next week." "August is the month for the largest equity outflows. It is clear to me that the passive inflows have slowed," he said. Looking at positions, Rubner says that his charts are "at max length" with little room for more buying. Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks. Wall Street Breakfast, Seeking Alpha's flagship daily business news summary, is a one-page summary that gives you a rapid overview of the day's key financial news. It is designed for easy readability on the site or by email (including mobile devices), and is published before 7:30 AM ET every market day. Wall Street Breakfast's readership of over 3.4 million includes many from the investment banking and fund management industries. Sign up here to receive the Wall Street Breakfast in your inbox every business day.Check out our Podcast RSS feed