• Apple’s Q1 2024 revenue and earnings beat estimates.
• EPS is up 16% to a new all-time high of $2.18 per diluted share.
• Sales in China disappointed – dropping 13%.

Last Thursday Apple announced financial results for its fiscal first quarter of 2024, which ended on the 30 ^th of December 2023. Revenue and earnings exceeded estimates, fuelled by record services revenue and almost 6% iPhone sales growth. Apple posted quarterly revenue of $119.6 billion, up 2% year over year, and an all-time record quarterly earnings per diluted share (EPS) of $2.18, up 16% year over year. The company also declared a cash dividend of $0.24 per share.

Apple’s services business saw significant growth of 11% rising to $23.12 billion in sales. The company’s wearables segment, which includes AirPods and Apple Watch sales, is still struggling and has declined 11% year over year to $11.95 billion, as weak demand persisted. Investors are becoming increasingly concerned that the same fate may await Apple’s $3,499 AR/AV headset, Apple Vision Pro.

The company reported 2% sales growth in the December quarter, reversing the trend of four straight quarters with annual revenue declines. Gross margin continued to rise and came at 45.9%, while net income was $33.92 billion, up 13% from the previous corresponding period.

Source: Company data as of 1 ^st of February 2024

Amid investors euphoria surrounding Meta and Amazon, Apple found itself on a rocky ground, after the company sales in its third largest market – China fell 13% for the quarter. Sales in China declined to $20.82 billion, falling short of analyst estimates of $23.53 billion, according to data from LSEG. China was a major growth driver for Apple, but fierce completion from Huawei and Xiaomi, and changing geo-politics are weighing. Investors’ concerns are mounting that the situation may not improve in 2024 either.

Despite the disappointing sales in China, Apple’s overall performance was robust, exceeding market expectations, with sales of iPhones reaching $69.70 billion.

Source: TradingView

Apple’s share price rose 54% in 2024 and is almost flat YTD, marking the least “magnificent” performance after Tesla from the group of seven. The share price did not behave as investors would have liked and traded in a wide range between $165.67 and $199.62 over the past six months. This led to Microsoft to now dethrone Apple as the most valuable stock, with Microsoft reaching a market cap of $3.01 trillion vs. $2.90 trillion for Apple.

Despite the latest stagnation of the share price, the weekly chart suggests that better days might be ahead. The weekly Relative Strength Index (RSI) is firmly in the bull market range, suggesting that higher price levels are feasible over the medium-term. Once key resistance of $199.62 is broken, a strong dynamic rally towards $230.00 – $235.00 is likely to unfold.

As we look into the rest of the year, there are plenty of reason to be bullish about Apple’s growth prospects. The company has the world’s most valuable technology platform with over 1.2 billion users.

Despite the weaker sales in China, Apple’s long-term outlook remains positive given its technology leadership and sticky user base. Upcoming developments in generative AI, accelerating service growth, and new product launches such as Vision Pro are likely to sustain Apple’s growth.

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1. Apple, Investor Relations