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Apple Stock Dips Despite Earnings Beat
3 Nov
Summary
- Apple exceeded earnings and revenue expectations for the fiscal fourth quarter.
- iPhone sales surpassed analyst estimates, but iPad and other product sales fell short.
- Analysts maintain a positive long-term outlook despite near-term margin concerns.
Apple surpassed analyst expectations for its fiscal fourth quarter, reporting earnings of $2.10 per share and revenue of $114.48 billion. The company's primary revenue driver, iPhone sales, reached $57.58 billion, exceeding consensus estimates. However, sales for the iPad and other product categories did not meet projections.
Looking ahead, Apple provided a gross margin forecast of 45% to 46% for the current quarter, which fell below the Street's average estimate of 46.3%. This outlook contributed to a roughly 4% slide in Apple's shares in premarket trading. Despite these mixed results, many Wall Street analysts maintain a positive long-term view on Apple's stock.
Analysts like Michael Ng from Goldman Sachs expressed increased confidence in the upcoming iPhone refresh cycle, particularly the potential for an "iPhone Duo" and foldable form factors. However, Ng also noted near-term headwinds such as Services performance and memory cost inflation.
Other analysts, including Evercore ISI and Bernstein, reiterated Outperform ratings, acknowledging current margin pressures from memory costs and moderating Services growth. They believe Apple is well-positioned for the future, especially with advancements in on-device intelligence and AI, leveraging its substantial installed base of over 2.5 billion active devices.
Barclays, however, maintained an Underweight rating, citing concerns about Services trends and regulatory pressures, particularly in the EU and US regarding link-out transactions. Bank of America and Citi maintained Buy ratings, highlighting Apple's strong revenue guidance for the upcoming quarter and its ability to drive engagement through its installed base and services, including enhanced Siri AI capabilities.
JPMorgan and Morgan Stanley reiterated Overweight ratings, trimming their price targets slightly. They pointed to the strength of the hardware product cycle as a key driver for future growth in the Services segment and highlighted the persistent strength of the iPhone as a core positive. Both acknowledged that while near-term headwinds exist, the long-term outlook remains constructive.
