Apple Faces Scrutiny as iPhone Sales Fall Amid AI Concerns
Apple (AAPL) is poised to release its Q1 earnings after the market closes on Thursday, but investors are apprehensive due to concerns that the Apple Intelligence platform is not boosting iPhone sales as expected.
Analysts Downgrade Apple Stock
Last week, Jefferies and Loop Capital downgraded AAPL, with Jefferies analyst Edison Lee anticipating lower-than-expected results for Q4 and Q2. IDC and Canalys report a 1% decline in iPhone market share in Q4, despite a 3% increase in overall smartphone shipments.
Apple Intelligence Push
Apple launched its AI initiative in October, but analysts have doubts about its impact on consumer demand for the iPhone 16 line. While Apple plans further AI updates, tangible hardware improvements remain more appealing to consumers.
Earnings Expectations
Bloomberg estimates predict Apple's EPS at $2.35 on revenue of $124.1 billion. This surpasses the $2.18 EPS and $119.5 billion revenue reported for the same quarter last year. The iPhone segment is projected at $71 billion, Services at $26 billion, and Greater China at $21.5 billion.
China Remains a Challenge
China has been a persistent issue for Apple, with sales declining in recent years. Despite upcoming product releases, including a new iPhone SE, iPads, and MacBook Airs, the region's impact on revenue remains uncertain.
Stock Performance Comparison
In the past 12 months, AAPL has risen 24%, similar to Google's 27%. Nvidia and Meta have outperformed, while Microsoft lags with an 8% gain.