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 first 5G smartphone. Investors anticipated excellent 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 three of the most noteworthy advancements bolstering Apple’s stock heading into its earnings report later on this month.
1. You still need to wait around forever to get an iPhone twelve Pro
It has been approximately two months since Apple introduced the iPhone 12 Pro, and clients buying nowadays still have to hold back up to three months for shipping and delivery. Which should be for decades in the era of next day delivery. By comparison, it took just 6 weeks for iPhone eleven demand to achieve equilibrium with supply last year, according to Credit Suisse analyst Matthew Cabral. The Apple iPhone twelve Pro seen from an angle.
The regular iPhone twelve and the iPhone 12 Mini are a lot more readily available both in store and for instant shipping. Which hints Apple must see a higher average selling price (ASP) for the iPhone when it announces its first quarter benefits.
Apple is reportedly ramping up production for the iPhone twelve in the first half of 2021. Coupled with other factors suggesting strong iPhone sales for the quarter, the higher ASP should lead to iPhone revenue significantly outperforming. And considering iPhone accounts for fifty % of revenue, and usually closer to 60 % in the earliest quarter, that must have a significant influence on its revenue versus expectations.
2. Suppliers are publishing big 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 (about $25.5 billion) for December, and quarterly revenue of NT$2 trillion. The beat expectations of NT$1.8 trillion, as reported by 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 its fourth-quarter revenue perspective 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 requirement for 5G chips as the reason. Considering Apple accounts for the majority of its revenue, it’s a pretty good bet those chips are actually going in iPhone 12s.
And in late December, Wedbush analyst Daniel Ives said his Asia supply chain checks “have today 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 in between Christmas Eve along with New Year’s Eve, iOS users spent $1.8 billion in the App Store. That’s up twenty seven % from last year, and an acceleration from the sixteen % growth in sales in the exact same time of 2019. The company also recorded $540 million in sales on New Year’s Day, up nearly forty % from previous year. Those numbers suggest a great deal of new iPhones under the tree this season.
It also bodes very well for Apple’s all-important services segment — its highest-margin and fastest-growing business. The App Store is actually Apple’s most profitable service, generating gross profits well above the membership 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 keep the remainder of our December quarter Apple Services forecast unchanged, the new App Store data would imply December quarter Services revenue of $14.84 [billion]… forty [basis points] ahead of consensus at $14.78 [billion].” It is most likely, however, that stronger App Store sales make the perfect indication of more potent sales of Apple’s other services.
It looks like the iPhone supercycle may be a reality this season based on the first results we’ve noticed along with other hints at demand which is intense. And that’ll bolster Apple’s whole business — and also the FAANG stock — when it reports its complete results on Jan. 27.