Apple Q1 Results Beat Estimates, Easing Concerns Over iPhone Sales in China
Wall Street analysts expressed relief after Apple (AAPL) reported first-quarter earnings that modestly surpassed forecasts. The company's explanation regarding declining iPhone sales in China allayed investors' anxieties.
Apple announced earnings per share of $2.40 on revenue of $124.3 billion, exceeding consensus estimates from Bloomberg of $2.35 EPS and $124.1 billion revenue.
Despite a 11% year-over-year decline in iPhone revenue from China, Apple CEO Tim Cook attributed this largely to channel inventory adjustments, indicating that overall demand remained robust.
JPMorgan analyst Samik Chatterjee upgraded Apple's price target from $260 to $270, while Citi's Atif Malik maintained a Buy rating, citing the "better than feared" results.
Cook highlighted Apple Intelligence as a driving force behind a record number of iPhone upgrades, suggesting that sales in China could improve once the Chinese government approves the rollout of AI features.
Raymond James analyst Srini Pajjuri emphasized Apple's strong position in the AI landscape due to its ecosystem strength, hardware capabilities, and privacy focus. This position differentiates Apple from its "Magnificent Seven" peers, making its stock particularly attractive amidst AI monetization discussions.
Apple's judicious approach to capital expenditures and focus on on-device AI, in contrast to its peers' aggressive data center investments, contributed to the positive reception of its earnings report.
However, Jefferies analyst Edison Lee maintained a cautious stance, expressing skepticism about the near-term attractiveness of AI services for smartphone users.