Apple's Stellar Earnings Beat Forecasts, Easing Analyst Concerns
Wall Street analysts breathed a collective sigh of relief after Apple (AAPL) surpassed first-quarter earnings expectations, alleviating worries about declining iPhone sales in China.
Reporting on Thursday, Apple posted earnings per share of $2.40 on revenue of $124.3 billion, exceeding Bloomberg consensus estimates of $2.35 EPS and $124.1 billion revenue. Despite an 11% decline in iPhone revenue in China year-over-year, Apple CEO Tim Cook attributed over half of this drop to strategic adjustments in channel inventory rather than weaker demand.
"Sales were a bit higher than we forecasted them to be towards the end of the quarter," Cook explained, indicating that the company intentionally reduced shipments to Chinese suppliers.
JPMorgan analyst Samik Chatterjee raised Apple's price target to $270, highlighting Cook's commentary and recent Chinese subsidies. Citi analyst Atif Malik reiterated his Buy rating, citing "better than feared" results and the potential for iPhone AI features to boost sales in China.
Apple's shares surged by 3% in early trading on Friday. Raymond James analyst Srini Pajjuri praised Apple's advantageous position in the AI landscape, emphasizing its ecosystem strength and hardware capabilities.
"On-device AI offers faster monetization potential through consumer hardware upgrades," Pajjuri stated, making Apple stock particularly attractive amidst the ongoing debate on AI monetization.
On the heels of DeepSeek's critique of Big Tech's AI investments, Apple's stock gained momentum, as its more conservative approach to capital expenditure was seen as prudent. Morgan Stanley analysts noted Apple's AI ambitions as "more contained" than its technology peers.
However, Jefferies analyst Edison Lee, who previously downgraded Apple, remained skeptical, questioning the attractiveness of AI services to smartphone users and expressing concerns about inflated market expectations for the iPhone upgrade cycle.