On Thursday, May 4th, Apple AAPL - the largest market cap in the stock market - is set to report their earnings after the market closes. As one of the world's leading consumer products and technology company, Apple's financial performance serves as a crucial indicator for the broader economy.
Apple's stock appears to be a solid investment so far this year, as evidenced by the impressive returns it has generated, which cannot be understated. The stock has surged by 30% year-to-date (as of May 3, 2023), 300% over the past five years, and 1100% over the last decade. However, it did experience a dip of -30% in 2022. Despite this setback, it has been able to reclaim most of its losses in the first four months of 2023.
Apple's overall revenue declined YoY for two consecutive quarters, but the decline was slightly smaller this quarter. Despite being influenced by the economic downturn, iPhone revenue reached a new high compared to the same period in previous years, and service revenue hit historic highs. The management team indicated that supply chain issues, including production stoppages caused by the COVID-19 pandemic in China, which had hindered product manufacturing in the past few quarters, have now been resolved. This quarter, no product lines were affected by component shortages.
The revenue performance of Mac and iPad was lower than market expectations. CEO Tim Cook explained that this was due to the overall economic deterioration and the higher revenue base from the same period last year when the M1 chip version MacBook Pro was launched. This year, the new version of MacBook Pro was only introduced in March, and the sales of iPad Pro with the M2 chip did not contribute to an increase in sales.
The Asia-Pacific region showed a growth rate of over 15% YoY, outperforming other regions. The European region grew slightly YoY, while the Americas and Japan saw declines of 8% and 7%, respectively, resulting in poor performance. The YoY decline in Greater China has narrowed from -7% in the previous quarter to -3%.
Furthermore, the market has high expectations for China's epidemic prevention policies. However, Qualcomm stated in its recent earnings report that China's economic recovery is slower than expected. Nevertheless, from Apple's performance in Greater China, it seems that China's economic recovery is underway.
In Q1, Apple lost its top spot to Samsung in the smartphone market, but global smartphone shipments declined by 13%, with all manufacturers seeing a YoY decrease. Against this backdrop, Apple's Q1 performance was still quite good, benefiting primarily from the excellent performance of the iPhone 14 series. However, its continued success in Q2/Q3 is uncertain.
In terms of revenue, Apple's iPhone sales reached $51.334 billion in Q1, up 1.5% YoY and accounting for 54% of total revenue. Apple claimed 18% of the global market share in Q1, while Samsung ranked first with 24%. The top 5 players in the industry are entrenched, and new players have little room to enter. These companies need new growth curves to achieve growth, as relying on annual 20% growth is no longer feasible. For Apple, VR may be a new area of growth, but it remains unclear whether Apple will enter the car manufacturing field.
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