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?
