As January draws to a close, we’re hours away from seeing the result of Apple’s Q1 earnings and how it’s set up to lead 2024. The last year was quite an eventful one for the company, rife with changes to trademark components of their devices, legal battles, and a 49 percent upsurge in the company stocks as well. Apple’s overall stock performance was better than the overall Nasdaq market but in comparison to the big tech FAANG companies (Facebook/Meta, Apple, Amazon, Netflix, and Alphabet/Google), Apple had a particularly poor showing. Apple’s current share price is marked at $184.4, trading on the lower end, with a market capitalization of $2.85 trillion.
Microsoft’s AI explorations and strategies greatly boosted its performance in 2023 and it briefly took over Apple as the world’s most valuable company—the first time since 2021. This could possibly occur again in 2024 unless Apple’s game plan for the year has some surprises lined up to boost its performance further. Experts have some predictions of what Apple’s Q1 earnings will look like this year and the factors that will play a role in determining which way the company will lean.
Predictions for Apple Q1 Earnings
This time last year, Apple earnings for Q1 in 2023 were on the decline with overall sales witnessing a 5 percent decline, reportedly the largest fall since 2016. Apple’s earnings report for the beginning of 2023 stated $117.15 billion and a net quarterly profit of $30.0 billion. In the most recent earnings report, Apple’s Q4 earnings for 2023 were marked at $89.5 billion and the net income at $22.96 billion, the earnings per share closing at $1.46. The company’s performance appears to have been on a downward trajectory but experts estimate that Apple’s Q1 earnings for 2024 will present better prospects for the company. Investopedia’s report on the analyst estimates for Q1 fiscal year 2024 predict $117.97 billion in revenue and a net income of $32.56 billion, with the diluted earnings per share at $2.09.
Apple has had quite a few upheavals in 2023 that led to its taciturn performance. In adherence to the EU’s Digital Markets Act, Apple had to make changes to its Lightning port, agree to provide RCS support, and even open up its devices to third-party app stores, albeit only in the EU. Amidst all this, Apple also faced legal trouble with Masimo and its lawsuit over the blood oxygen sensor in the Apple watch, a class action lawsuit over its Family Sharing feature, and a lawsuit over the iPhone battery, just to name a few examples of their legal troubles. The amalgamation of issues has likely caused sales to waver but the iPhone has still remained at the top of its game.
Apple’s Earnings Report Relies Most Strongly on the iPhone’s Performance
Apple earnings in Q1 2023 and preceding years always rely quite heavily on how the iPhone performs. MacRumors presented that the iPhone made up 56 percent of revenue in Q1 of 2023, and this is likely still true for the company. As per Statista’s records, Apple earnings from iPhone sales went up to $43.81 billion or approximately 45 percent of their total earnings in the fourth quarter of FY 2023. The iPhone 15 has been doing quite alright in terms of its performance and it’s unlikely that its popularity should dip anytime soon.
The Apple Vision Pro could also shift the valuation of the Apple stock around once the devices become more commercially available, although the degree to which this will happen is quite unclear. Priced at $3499, the Apple Vision Pro takes the company’s “premium” branding quite a few steps further than anything we’ve seen from them before. While per-unit sales might bring in a higher amount of money, the number of units they sell will likely be quite limited. There have been rumors that Apple is working to design a cheaper alternative as well, but that particular future product doesn’t figure into the Apple Q1 earnings that are in discussion.
Analysts are also interested to see how Apple’s earnings will be affected by its performance in the Chinese market. The company is reportedly the largest phone seller in China right now, and a huge chunk of its revenue stems from the country’s purchasing habits. With the rise of more mid-to-top range competitors that are bringing in novel experiences such as folding phones and AI services, Apple’s own, more standard, offerings might just pale in comparison. China’s apparent economic slowdown might also play a role in Apple’s earnings if the consumer preference does not, affecting purchasing power for customers in the region.
In general, Nasdaq’s ‘Moderate Buy’ rating puts Apple stock in a position for growth if no major destabilizers come up and push things out of balance for the company. If Apple earnings Q1 2023 earnings are exceeded this quarter, investors may be more willing to place their bets on the company and Apple could regain its $3 trillion market cap as a result. Other major tech companies like Amazon should also have their Q1 reports out this week so we’ll likely have a few performance comparisons and predictions to draw soon enough.