Apple Beats Estimates, Eases Concerns Over iPhone Sales in China
Key Points:
* Apple reported better-than-expected earnings for Q1, with EPS of $2.40 and revenue of $124.3 billion.
* iPhone revenue in China declined 11% year-over-year, but Apple attributed it to strategic inventory adjustments.
* Analysts are optimistic about Apple's AI capabilities and its positioned in the AI bubble.
Analysis:
Wall Street analysts expressed relief as Apple Inc. (AAPL) exceeded their expectations in its first-quarter earnings report. The tech giant reported an 11% decline in iPhone revenue in China, but CEO Tim Cook attributed it to channel inventory changes rather than weaker demand.
Analysts pointed to Cook's explanation that over half of the decline was due to reduced shipments to suppliers. They also noted that Apple's recent price cuts in China and the rollout of AI features could support future sales.
JPMorgan analyst Samik Chatterjee raised his price target on Apple to $270, citing Cook's commentary and the potential support from Chinese subsidies. Citigroup's Atif Malik maintained a Buy rating, emphasizing the outperformance of regions where iPhone AI features have been rolled out.
Raymond James analyst Srini Pajjuri suggested that Apple's unique ecosystem and focus on privacy position it well in the AI bubble. Morgan Stanley analysts acknowledged Apple's more contained AI ambitions compared to competitors.
However, Jefferies analyst Edison Lee remained skeptical, questioning the attractiveness of AI services to smartphone users and expressing concern about overly optimistic market expectations for iPhone upgrades.