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 excellent sales as wireless carriers force their 5G networks and build excitement around the 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 on this month.
1. You still must wait around forever to get an iPhone twelve Pro
It’s been more than 2 months since Apple introduced the iPhone twelve Pro, and clients buying today still need to hold back up to 3 weeks for shipping. That may as well be for years in the age of next day delivery. By comparison, it took only 6 months for iPhone 11 demand to achieve equilibrium with supply last year, based on Credit Suisse analyst Matthew Cabral. The Apple iPhone twelve Pro seen from an angle.
The standard iPhone twelve and the iPhone 12 Mini are much more being sold both in store and for instantaneous delivery. Which implies 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 very first half of 2021. Combined with other things suggesting very strong iPhone sales for the quarter, the higher ASP should lead to iPhone revenue greatly outperforming. And viewing iPhone accounts for fifty % of revenue, and generally closer to 60 % in the very first quarter, which need to have a meaningful impact on its revenue versus expectations.
2. Suppliers are publishing huge revenue 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 $25.5 billion) for December, and quarterly revenue of NT$two trillion. The beat expectations of NT$1.8 trillion, as reported by Bloomberg.
Foxconn’s outperformance is also in line with the greater-than-expected demand for the iPhone twelve Pro. The business is the exclusive supplier of the high end products.
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 need for 5G chips as the primary reason. Considering Apple accounts for the vast majority of its revenue, it is a very good bet those potato chips are going in iPhone 12s.
And also for 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 records in the App Store
Apple reported record gross sales for the App Store of its in the annual brand new year of its update. In the week in between Christmas Eve and New Year’s Eve, iOS users spent $1.8 billion in the App Store. That’s up 27 % from year which is last, as well as an acceleration from the 16 % growth of sales of the same time in 2019. The company also recorded $540 million in sales on New Year’s Day, up almost forty % from year which is last. Those numbers suggest a good deal of new iPhones under the tree this season.
What’s more, it bodes well for Apple’s all-important services segment — its highest-margin and fastest-growing enterprise. The App Store is actually Apple’s most lucrative service, generating gross earnings well above the membership 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 remainder 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 advance of consensus at $14.78 [billion].” It is most likely, nevertheless, that more potent App Store sales are a good indication of more potent sales of Apple’s other services.
It looks as the iPhone supercycle could be a reality this season based on the first results we’ve noticed and other hints at demand that is intense . And that’ll bolster Apple’s entire business — and the FAANG stock — if this reports the full results of its on Jan. 27.