Apple (NASDAQ:AAPL) headed into its fiscal 2021 first quarter with expectations which are high from investors. The highlight of Apple’s quarter was the launch of the iPhone twelve, the tech titan’s very first 5G smartphone. Investors anticipated strong sales as wireless carriers force their 5G networks and build excitement around the new iPhones. All signs suggest Apple’s delivered on those expectations.
Here are three of the most noteworthy developments bolstering Apple’s stock heading into its earnings report later on this month.
1. You’ll still need to wait around indefinitely to get an iPhone 12 Pro
It has been more than 2 weeks since Apple introduced the iPhone twelve Pro, and clients buying nowadays still need to hold back up to 3 months for delivery. That might as well be forever in the age of next-day shipping. By comparison, it took only 6 months for iPhone 11 demand to attain equilibrium with supply last year, as reported by Credit Suisse analyst Matthew Cabral. The Apple iPhone twelve Pro seen from an angle.
The regular iPhone 12 and the iPhone twelve Mini are much more readily available both in-store and for instantaneous shipping. That suggests Apple must see an improved average selling price (ASP) for the iPhone when it announces the first-quarter results of its.
Apple is reportedly ramping up production for the iPhone twelve in the very first half of 2021. Coupled 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 generally closer to sixty % in the first quarter, that need to have a meaningful impact on its revenue versus expectations.
2. Suppliers are publishing huge earnings 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. The beat expectations of NT$1.8 trillion, according to Bloomberg.
Foxconn’s outperformance is additionally in line with the greater-than-expected demand for the iPhone twelve Pro. The company is the premium supplier of the high-end devices.
Meanwhile, Dialog Semiconductor raised its fourth quarter revenue outlook from a range of $380 million to $430 million to between $436 million and $441 million, Barron’s reports. The chipmaker cited increased demand for 5G chips as the primary reason. Considering Apple accounts for the majority of the revenue of its, it is a very great bet those chips are going in iPhone 12s.
And for late December, Wedbush analyst Daniel Ives said his Asia source chain checks “have now exceeded actually our’ bull case scenario'” in a note to investors.
3. New records 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 and New Year’s Eve, iOS computer users spent $1.8 billion in the App Store. That’s up twenty seven % from last year, as well as an acceleration from the 16 % growth in sales in the exact same period of 2019. The company even recorded $540 million in sales on New Year’s Day, up almost 40 % from last year. Those numbers indicate a good deal of new iPhones under the tree this year.
Additionally, it bodes very well for Apple’s all-important services segment — its highest-margin and fastest-growing business. The App Store is Apple’s most lucrative service, generating gross earnings well above the subscription services of its as Apple Music or Apple TV. So outperformance on that front must lead to better-than-expected earnings.
Morgan Stanley analyst Katy Huberty notes, “If we keep the rest of our December quarter Apple Services forecast unchanged, the most recent App Store data would imply December quarter Services revenue of $14.84 [billion]… 40 [basis points] in front of consensus at $14.78 [billion].” It’s very likely, however, 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 based on the first results we have spotted as well as other hints at demand that is intense . And that’ll bolster Apple’s whole company — and also the FAANG stock — in the event it reports the full results of its on Jan. twenty seven.