Apple (NASDAQ:AAPL) headed into its fiscal 2021 first quarter with higher expectations from investors. The highlight of Apple’s quarter was the launch of the iPhone twelve, the tech titan’s very first 5G smartphone. Investors anticipated strong sales as wireless carriers push 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 still must wait around indefinitely to get an iPhone twelve Pro
It has been over 2 months since Apple released the iPhone 12 Pro, and customers purchasing nowadays still have to wait a maximum of 3 months for delivery. That might as well be for decades in the era of next day shipping. By comparison, it took just six months for iPhone eleven need to attain equilibrium with supply last year, according to Credit Suisse analyst Matthew Cabral. The Apple iPhone 12 Pro observed from an angle.
The standard iPhone twelve and also the iPhone 12 Mini are much more being sold both in-store and for instant delivery. That implies Apple should see a higher average selling price (ASP) for the iPhone when it announces the first-quarter results of its.
Apple is reportedly ramping up production for the iPhone 12 in the first half of 2021. Combined 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 50 % of revenue, and typically closer to 60 % in the very first quarter, that should have a significant impact on its revenue versus expectations.
2. Suppliers are posting huge earnings 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, according to 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 perspective of its 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 demand for 5G chips as the reason. Considering Apple accounts for the vast majority of its revenue, it’s a pretty good bet those chips are going in iPhone 12s.
And for late December, Wedbush analyst Daniel Ives said his Asia source chain checks “have now exceeded even our’ bull case scenario'” in a note to investors.
3. New files in the App Store
Apple reported record gross sales for its App Store in the annual 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 twenty seven % from year that is last, plus an acceleration from the sixteen % growth of sales in the exact same time of 2019. The company even recorded $540 million in sales on New Year’s Day, up nearly 40 % from year that is previous. Those numbers suggest a great deal of new iPhones underneath the tree this year.
In addition, 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 profits well above the membership services of its as Apple Music or Apple TV. So outperformance on that front should lead to 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]… 40 [basis points] ahead of consensus at $14.78 [billion].” It’s quite possible, however, that stronger App Store sales are a good indication of more potent sales of Apple’s other services.
It looks like the iPhone supercycle could be a reality this year based on the first results we’ve seen along with other hints at strong need. And that’ll bolster Apple’s entire business — as well as the FAANG stock — in the event it reports the full results of its on Jan. 27.