Apple’s earning is scheduled for next Thursday 10/31. Here are some thoughts:
iPhone 16 sales are not gaining traction yet
Apple’s Artificial intelligence is not yet available; Apple has set the expectation that while they may have something available in the next months, but expect it is going to take at least another 2 years for it to be meaningfully useful.
$VZ, $T, $TMUS all talked about iPhone upgrade cycle has not started in their earnings call…
Vision Pro is uninspiring
China is a concern
Chinese sales are below expectation
China may restrict AI features/ capability; Apple may mitigate this by partnering with some local players like BIDU?
Huawei is catching up very fast, currently their top end model is as good as iphone 14 at much better price
So far Tim Cook has managed China very well, but if Trump wins and he slaps 20% or more tarriff’s… need to see how badly it is going to hurt Apple.
Long-term India is a bright spot
There are 300 million iphones that need are potential upgrades
Lastly, 45% rally from April. I am expecting the earnings may be muted if not negative.
The first 2 points are confirmed, which are near-term related.
No major cuts from the analysts, and after reviewing some reports, looks like mostly this is what is expected, no immediate catalyst, but don’t want to miss the iPhone upgrade cycle…
So, the stock is going to be moving sideways. What do we do? Sit tight and wait for some clarity. As mentioned earlier they are going to be releasing the first set of AI features in the next 2 months. Need to see how good, and how the market and more importantly developers react to it. I wish the stock immediately sells down, so you could buy and wait. Now, I just wait for the right price to buy.
Just to give some color, the analysts are expecting the upgrade super-cycle will increase revenue by $100 B per year and profits by$45 B by 2026.
That is the EPS will raise by 50% in 2 years, to $9 per share. I am sure, WEB knows this, understands this. Still decided to sell Apple shares is making me wonder, is this entirely Berkshire related internal decision or are analysts wrong or the valuation is already pricing in that?
I was bearish on $AAPL for sometime, not only I sold my positions, bought a put spread, and then went naked call selling… after today’s breakout, I am throwing towel and going long.
In the last 4 years, Apple net income increase by $7 B, and EPS increased from $5.61 to $6.75, that is net income increased by 10%, but EPS increased by 20% due to share buyback. But share price doubled… primarily due to multiples expansion.
China sales are decelerating due to competition. Chinese government banned their employees from using iPhone. However, company mentioned the sales drop of 19% is due to channel inventory issues.
We are at the cusp of iPhone upgrade super cycle; There are over 300 million iPhones to be upgraded.
iPhone rollout of Apple intelligence sucks big time
iPhone ecosystem is still strong, mobile phones may be the device with which consumers will consume AI. AI App store will be the toll gate and will collect obscene tolls.
Apple is shutting down Apple Vision Pro.
Interestingly, META thinks glasses are the way to access AI
For now, I got out of most of my last purchase around $255 to $260; There are few $215, Feb expiry covered calls. Not sure I want to further roll them, want to wait for a better entry price.
For now, I may be watching how Apple story unfolds from sideline.
No Apple is not involved in financial engineering, they are simply returning the free cash generated by the business, that they have no need, to shareholders. In many ways, I applaud them because they are not squandering it in M&A or diversification for the sake of, I have to do something.
Leaders have to take risks. That includes going down some blind alleys. You cannot be a leader without them.
You expect leaders to constantly explore new ideas. That is what R&D is supposed to do. You hope they limit investment until opportunity is promising. But no matter. Needs change. And competition is trying to get there first. Visionary leadership and maybe a bit of luck are required.
Today Morgan Stanley’s influential analyst downgraded the stock, technically only reduced the price target from $275 to $250 on lack of meaningful traction in AI, and Siri failure. I expect this to be the start. For the last couple of weeks there were news about personnel changes in AI, etc.
@dividends20 I have already mentioned that Apple does not do M&A. I am hearing that the AI & Siri are going to be part of their core OS, and that’s the reason the extended timeline and it is going to coincide with Apple 20 release, Current is 18.x, and 20 is one after the current release. May be Apple accelerate it to bring it to 19.
Separately, with access to the best talent in the world, and the largest installed base, $APPL AI strategy is a major failure.
I will continue to watch this from the sideline. Of course, time to time I dabble in some trading but don’t have any position and waiting to see how Apple’s AI story unfolds.
Suddenly Apple’s fortune is now directly tied to Trump’s tariff policy. Tim Cook maintained a close relationship with Trump, and Apple is heavily dependent on China as a consumer market and as a manufacturing base. Even though they were diversifying out of China, still they are heavily dependent on them.
While Apple did receive some break over the last weekend, it looks like it is going to be a pawn on US-China tariff war.
I am not sure how this will impact Apple stock long-term, thus overall Index performance, since Apple is 7% of the Index and most valuable company.
There are two aspects to China dependency. First China posse skilled engineering, & labor, second when that is combined with cheap labor, and their ability to manufacture in scale…
So, I guess you are not realizing that if Apple were to move the manufacturing out of China, that will make iPhone prices to $3000. At that point I am not sure the loyal fan base will exist.
You can tell small countries don’t retaliate, but negotiate. You cannot say that to China, especially with 125, 145% tariff rate. China will retaliate against big tech and service companies.
The current administration is trying to change lot of long-held economic policies. I don’t think they are short-term, rather, there are long-term re-rating of US markets, US Dollar may be in play here.
When stock market sells, the money goes to bond market/ US Dollar. But we had all 3 declining. That means the money is leaving US. I dont’ know whether it is short-term or long-term. All I know is we need to be aware of it.
As a long time APPL guy, my hopes are on some sanity coming up and these idiotic tariff games get slapped down, in the meantime, trust of just about all of our Alies have been lost, at least as long as they, Congress, has no backbone and takes whatever action they need to do to bring this current mess back under control, and away from all the conmen now in place… So many areas to cover to control this chaos… Sickening…
We have discussed this before. The cost increase is likely to be smaller. Plus other countries also have low cost labor. India seems most likely. If China balks at a trade deal other countries may make deals.
Manufacturing cost can probably be resolved. Loss of sales in China may be more of a concern.
I didn’t pluck that number from the ceiling, and it is the number used by analysts in modeling the impact. Until someone comes out and says, Apple can do it for cheaper, I am going with that number.
There is a reason why I linked that instagram post. China is not about cheap labor. Change your views. China has an engineering talent that is not going to be available in India. It will decades to develop such a deep engineering talent in India or anywhere else.
Here is a real story. Samsung has opened a factory in Chennai, India. They have to relocate over 1000 engineers from Korea to India, there are over 5000 korean engineers in that state alone to support various Korean companies engineering and operations.
China has the benefit of up to date engineering experience. I attended an engineering school in the '60. We already had many students from India on campus.
India has a long history of engineering education. Universities where admission is extremely competitive. For years engineers from India had better job opportunities outside the country. But growing economy provides more opportunities.
Strong family values often means long trips back to India for kids to spend time w grandparents. Many are eager to repatriate when good jobs allow.
