Topline
Apple shares rallied Thursday ahead of the Silicon Valley giant’s crucial quarterly earnings report, headlining wider gains as the iPhone maker looks to reverse its stock market slump.
An Apple store in Shanghai last month.
Key Facts
Apple’s stock rose 1.8% to over $172 per share by mid-afternoon trading, helping boost the select Dow Jones Industrial Average up 0.6%, or 240 points, the yardstick S&P 500 up 0.6% and the tech-focused Nasdaq up 1.1%.
The rally, which also trailed a Wednesday afternoon press conference from Federal Reserve chief’s Jerome Powell that many interpreted as fairly optimistic, comes hours before Apple will disclose results from its first fiscal quarter of 2024.
Apple’s earnings come at a pivotal time for the stock, whose 3% gain over the last two weeks outpaces the S&P’s sub-1% gain, but which has provided a far worse return to investors than the S&P in the medium term, with Apple’s -11% and 2% year-to-date and 12-month returns underwhelming the S&P’s 6% and 24% returns over the time frames.
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What To Watch For
Analysts expect Apple to report $90.4 billion of quarterly revenue and $1.51 earnings per share after Thursday’s market close, according to FactSet data, which would be -5% top line growth and -1% bottom line growth, with the earnings slump—as its big tech peers’ earnings explode—strongly contributing to Apple’s stock market headache.
Key Background
Apple is amidst an unusually challenging financial period, with overall revenues declining in four of its last five quarters on an annual basis. The stagnating current growth, combined with shaky investor confidence in its ability to return to significant growth, has put Apple stock in its precarious position. Apple’s $380 billion loss in market value this year caused it to lose its position as the world’s most valuable company to rival Microsoft, which has added $150 billion in market value as its quarterly sales grew by 17% annually. But Apple stock’s recent rally indicates “the sentiment has improved despite tough data points as the focus has shifted to owning the potential AI upgrade cycle,” JPMorgan analyst Samik Chatterjee wrote about Apple in a Tuesday note to clients. Chatterjee’s buy rating and $210 price target for Apple implies nearly 20% upside, forecasting Apple to top its over $3 trillion valuation achieved last year. Apple shares have declined in each of their last three normal trading sessions following earnings.
