Apple (NASDAQ:AAPL) headed into its fiscal 2021 first quarter with expectations that are higher from investors. The highlight of Apple’s quarter was the launch of the iPhone 12, the tech titan’s very first 5G smartphone. Investors anticipated strong sales as wireless carriers force their 5G networks and build excitement around the brand new iPhones. All signs indicate Apple’s delivered on those expectations.
Here are three of the most noteworthy advancements bolstering Apple’s stock heading into its earnings report later this month.
1. You’ll still must wait forever to get an iPhone 12 Pro
It’s been approximately two weeks since Apple released the iPhone 12 Pro, and clients purchasing nowadays still have to hold back a maximum of three weeks for shipping and delivery. That might as well be for years in the era of next-day shipping. By comparison, it took just six months for iPhone 11 demand to achieve equilibrium with supply last year, based on Credit Suisse analyst Matthew Cabral. The Apple iPhone 12 Pro observed from an angle.
The standard iPhone 12 as well as the iPhone twelve Mini are a lot more being sold both in store and for instantaneous delivery. That hints Apple better see an improved average selling price (ASP) for the iPhone when it announces its first quarter results.
Apple is reportedly ramping up production for the iPhone 12 in the earliest half of 2021. Combined with other things suggesting strong iPhone sales for the quarter, the taller ASP should lead to iPhone revenue significantly outperforming. And considering iPhone accounts for 50 % of revenue, and typically closer to 60 % in the very first quarter, that should have a meaningful influence 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 $25.5 billion) for December, and quarterly revenue of NT$two trillion. The beat expectations of NT$1.8 trillion, according to Bloomberg.
Foxconn’s outperformance is in addition in line with the greater-than-expected need for the iPhone 12 Pro. The company is the premium supplier of the high-end products.
Meanwhile, Dialog Semiconductor raised the fourth quarter revenue perspective of its from a range of $380 million to $430 million to between $436 million and $441 million, Barron’s reports. The chipmaker cited increased requirement for 5G chips as the reason. Considering Apple accounts for the majority of its revenue, it’s a pretty good bet those potato chips are going in iPhone 12s.
And also in 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 the App Store of its in its annual new year update. In the week in between Christmas Eve along with New Year’s Eve, iOS users spent $1.8 billion in the App Store. That is up 27 % from previous year, as well as an acceleration from the 16 % growth of sales of the same period of 2019. The company even recorded $540 million in sales on New Year’s Day, up about 40 % from previous year. Those numbers indicate a lot of new iPhones underneath the tree this year.
Additionally, 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 gross earnings well above the subscription services of its as Apple Music or perhaps Apple TV. So outperformance on that front must cause better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we maintain the rest of our December quarter Apple Services forecast unchanged, the latest App Store data would imply December quarter Services revenue of $14.84 [billion]… 40 [basis points] ahead of consensus at $14.78 [billion].” It is quite possible, nonetheless, that more potent App Store sales are a great indication of stronger sales of Apple’s other services.
It looks as the iPhone supercycle could be a reality this year depending on the first results we’ve noticed as well as other hints at demand that is strong . And that’ll bolster Apple’s whole business — and the FAANG stock — in the event it reports the full results of its on Jan. twenty seven.