Apple (NASDAQ:AAPL) headed into its fiscal 2021 very first quarter with expectations which are higher from investors. The highlight of Apple’s quarter was the launch of the iPhone twelve, the tech titan’s first 5G smartphone. Investors anticipated strong sales as wireless carriers force their 5G networks and build excitement around the brand new iPhones. All signs suggest Apple’s delivered on those expectations.
Here are 3 of the most noteworthy developments bolstering Apple’s stock heading into its earnings report later on this month.
1. You’ll still need to wait forever to get an iPhone twelve Pro
It’s been more than two weeks since Apple released the iPhone 12 Pro, and clients purchasing today still need to wait up to 3 months for shipping and delivery. That might as well be forever in the era of next-day delivery. By comparison, it took only six weeks for iPhone eleven demand to attain equilibrium with supply last year, as reported by Credit Suisse analyst Matthew Cabral. The Apple iPhone 12 Pro seen from an angle.
The regular iPhone 12 as well as the iPhone 12 Mini are much more readily available both in store and for instant delivery. That suggests Apple must 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 12 in the very first half of 2021. Combined with other factors suggesting very strong iPhone sales for the quarter, the taller ASP should lead to iPhone revenue greatly outperforming. And considering iPhone accounts for fifty % of revenue, and generally closer to sixty % in the first quarter, that need to have a significant influence on the revenue of its versus expectations.
2. Suppliers are posting huge revenue numbers
Apple’s biggest iPhone assembler, Foxconn, announced record revenue for the month of December. The Taiwanese business, 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, as reported by Bloomberg.
Foxconn’s outperformance is in addition in line with the greater-than-expected need for the iPhone twelve Pro. The business is the exclusive supplier of the high end products.
Meanwhile, Dialog Semiconductor raised its fourth-quarter revenue outlook from a range of $380 million to $430 million to between $436 million as well as $441 million, Barron’s reports. The chipmaker cited increased requirement for 5G chips as the primary reason. Considering Apple accounts for the vast majority of the revenue of its, it’s a really good bet those potato chips are actually going in iPhone 12s.
And for late December, Wedbush analyst Daniel Ives said his Asia supply chain checks “have now exceeded even our’ bull case scenario'” in a note to investors.
3. New records in the App Store
Apple reported record gross sales for its App Store in the annual brand new year of its update. In the week between Christmas Eve along with New Year’s Eve, iOS computer users spent $1.8 billion in the App Store. That is up 27 % from year which is last, and an acceleration from the sixteen % growth in sales of the exact same time of 2019. The company even recorded $540 million in sales on New Year’s Day, up about forty % from year which is previous. Those numbers suggest a good deal of new iPhones under the tree this year.
What’s more, it bodes well for Apple’s all-important services segment — its fastest-growing and highest-margin enterprise. The App Store is actually Apple’s most profitable service, generating yucky earnings well above its subscription services like Apple Music or maybe Apple TV. So outperformance on that front must cause better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we keep the remainder of our December quarter Apple Services forecast unchanged, the most recent 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 is most likely, nevertheless, that more potent App Store sales make the perfect indication of more potent sales of Apple’s other services.
It looks as the iPhone supercycle may be a reality this season based on the first results we have seen as well as other hints at strong demand. And that’ll bolster Apple’s entire company — and also the FAANG stock — in the event it reports the full results of its on Jan. 27.