Apple Inc. (AAPL) is set to announce its second-quarter earnings this Thursday, marking its first earnings report since the announcement of Tim Cook’s planned departure as CEO in September, to be succeeded by John Ternus, the current senior vice president of hardware.
Following a record-breaking first quarter attributable to robust iPhone sales, analysts anticipate more positive performance in Q2. However, the tech giant, similar to the broader smartphone and computer market, is facing challenges due to a global memory shortage exacerbated by the escalating demand from artificial intelligence (AI) data centres.
Data from the International Data Corporation indicates that global smartphone shipments fell by 4.1% in the first quarter, totalling 289.7 million units, marking a halt to a ten-quarter growth streak that commenced in mid-2023. Although Apple’s premium iPhones are expected to remain resilient against this downturn, the company has cautioned that rising memory costs could negatively impact its profit margins.
For the upcoming quarter, Wall Street analysts forecast Apple to report earnings per share (EPS) of $1.96 on revenues of $109.66 billion, according to consensus estimates from Bloomberg. This compares favourably to last year’s Q2 figures of $1.65 EPS and revenues of $95.35 billion.
Projected figures suggest a 21.64% year-on-year increase in iPhone revenue to approximately $56.97 billion, marking the second consecutive quarter of over 20% growth in this segment. Meanwhile, revenue from Apple’s Services division is expected to rise to $30.37 billion, up from $26.64 billion in the same quarter last year. The Mac line is anticipated to contribute $8.13 billion, benefiting from heightened interest in the Mac mini, particularly as developers lean towards utilising it for AI applications. Additionally, the recent launch of the $599 MacBook Neo in March may further bolster sales in this category.
Revenue from Greater China is expected to reach $18.9 billion, reflecting an 18.15% increase year-on-year but showing a slight dip from the previous quarter. Investors will be keen to hear comments from Cook during the earnings call regarding Apple’s advancements in AI, particularly in light of Bloomberg’s Mark Gurman’s reports of upcoming AI developments slated for disclosure at the annual Worldwide Developers Conference (WWDC) in June, which is expected to spotlight the next-generation Siri and other AI functionalities.
As the technology landscape evolves, analysts and consumers alike are eager to see how Apple navigates these challenges and leverages opportunities in the realms of AI and hardware innovation.
For the latest financial analysis and updates on earnings expectations, keep an eye on subsequent reports.
