Apple (NASDAQ:AAPL) headed into its fiscal 2021 very first quarter with expectations that 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 robust sales as wireless carriers push their 5G networks and build excitement around the new iPhones. All signs indicate 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 must wait indefinitely to get an iPhone twelve Pro
It’s been over 2 months since Apple introduced the iPhone 12 Pro, and customers purchasing nowadays still have to wait a maximum of three weeks for shipping and delivery. That should be for decades in the era of next-day shipping. By comparison, it took only six weeks for iPhone eleven demand to reach equilibrium with supply last year, as reported by Credit Suisse analyst Matthew Cabral. The Apple iPhone 12 Pro seen from an angle.
The standard iPhone 12 and the iPhone 12 Mini are much more found both in store and for instantaneous shipping. Which hints Apple should see a higher average selling price (ASP) for the iPhone when it announces the first-quarter benefits of its.
Apple is reportedly ramping up production for the iPhone 12 in the very first half of 2021. Coupled with other factors suggesting very strong iPhone sales for the quarter, the higher ASP should lead to iPhone revenue significantly outperforming. And viewing 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 big revenue numbers
Apple’s biggest iPhone assembler, Foxconn, announced record revenue for the month of December. The Taiwanese company, 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$2 trillion. That beat expectations of NT$1.8 trillion, based on Bloomberg.
Foxconn’s outperformance is additionally in line with the greater-than-expected demand for the iPhone twelve Pro. The business is the exclusive supplier of the high end devices.
Meanwhile, Dialog Semiconductor raised the fourth quarter revenue outlook of its from a range of $380 million to $430 million to between $436 million and $441 million, Barron’s reports. The chipmaker cited increased requirement for 5G chips as the main reason. Considering Apple accounts for the vast majority of the revenue of its, it’s a very good bet those chips are going in iPhone 12s.
And in late December, Wedbush analyst Daniel Ives said his Asia supply chain checks “have today exceeded actually our’ bull case scenario'” in a note to investors.
3. New documents in the App Store
Apple reported record gross sales for its App Store in its annual brand new year update. In the week in between Christmas Eve and New Year’s Eve, iOS users spent $1.8 billion in the App Store. That is up twenty seven % from last year, plus an acceleration from the 16 % growth in sales in the same time of 2019. The company even recorded $540 million in sales on New Year’s Day, up almost 40 % from year which is last. Those numbers suggest a lot of new iPhones underneath the tree this season.
It also bodes well for Apple’s all important services segment — its highest-margin and fastest-growing enterprise. The App Store is actually Apple’s most profitable service, generating gross earnings well above the membership services of its as Apple Music or Apple TV. So outperformance on that front must cause better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we keep the majority 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] ahead of consensus at $14.78 [billion].” It’s quite possible, however, that more potent App Store sales are a good indication of stronger sales of Apple’s other services.
It looks like the iPhone supercycle may be a reality this season based on the early results we’ve seen as well as other hints at demand which is strong. And that’ll bolster Apple’s whole business — and also the FAANG stock — in the event it reports its complete results on Jan. twenty seven.