Apple (NASDAQ:AAPL) headed into its fiscal 2021 very first quarter with high expectations 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 push 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 have to wait around indefinitely to get an iPhone 12 Pro
It has been above two weeks since Apple introduced the iPhone 12 Pro, and clients purchasing nowadays still need to wait as many as three months for shipping and delivery. Which may as well be for years in the age of next-day delivery. By comparison, it took just 6 months for iPhone eleven interest to achieve equilibrium with supply last year, as reported by Credit Suisse analyst Matthew Cabral. The Apple iPhone twelve Pro seen from an angle.
The standard iPhone 12 and also the iPhone 12 Mini are much more readily available both in store and for instantaneous delivery. Which hints Apple should see an improved 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. Combined with other things 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 first quarter, that must have a significant impact on the revenue of its versus expectations.
2. Suppliers are publishing big profits numbers
Apple’s biggest iPhone assembler, Foxconn, announced record revenue for the month of December. The Taiwanese business, 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$2 trillion. That beat expectations of NT$1.8 trillion, based on Bloomberg.
Foxconn’s outperformance is in addition in line with the greater-than-expected demand for the iPhone twelve Pro. The business enterprise 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 and $441 million, Barron’s reports. The chipmaker cited increased need for 5G chips as the main reason. Considering Apple accounts for the vast majority of the revenue of its, it is a pretty great bet those chips are actually going in iPhone 12s.
And for late December, Wedbush analyst Daniel Ives said his Asia source 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 the App Store of its in the annual new year of its update. In the week between Christmas Eve and New Year’s Eve, iOS users spent $1.8 billion in the App Store. That is up twenty seven % from previous year, and an acceleration from the 16 % growth of sales in the exact same time of 2019. The company even recorded $540 million in sales on New Year’s Day, up about 40 % from last year. Those numbers suggest a good deal of new iPhones underneath the tree this season.
Furthermore, 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 profits well above the membership services of its as Apple Music or Apple TV. So outperformance on that front should result in better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we keep the remainder of our December quarter Apple Services forecast unchanged, the latest App Store data would imply December quarter Services revenue of $14.84 [billion]… forty [basis points] ahead of consensus at $14.78 [billion].” It’s very likely, however, that more potent App Store sales make the perfect indication of stronger sales of Apple’s other services.
It looks like the iPhone supercycle could be a reality this season based on the early results we have noticed as well as other hints at need which is strong. And that’ll bolster Apple’s whole business — as well as the FAANG stock — in the event it reports its full results on Jan. 27.