Apple - what to expect from the 3Q23/24 results? 📊

4:05 pm 1 August 2024

Apple (AAPL.US) will release its 3Q23/24 results today after the close of the US session. The main focus for investors will be data on revenue growth in the Chinese market, as well as possible new information regarding the use of AI. 

3Q23/24 forecasts

Analysts' consensus forecasts growth in all of the company's key financial figures. Revenues are expected to reach $84.42 billion, which would be 3% higher than a year earlier. This would also mark a record Q3, which seasonally performs worse than the others. At the gross profit level, the consensus forecasts $39.02 billion, which implies a 46.2% gross margin (+1.7 p.p.). Analysts also anticipate an increase in operating margin, thanks to a 7% growth in operating profit. They estimate its value at $24.68 billion. This implies an increase in adjusted diluted earnings per share to $1.34 (+6% y/y). 

Apple's projected earnings (in $ billion, excluding earnings per share). Source: Bloomberg, XTB Research 

Sales in China a major unknown 

Apple has been facing problems in the smartphone market in China since the end of last year. In recent quarters, iPhone sales have regularly declined there, affecting both the company's results and its position in the market. Apple has been losing market share in China mainly to local competitors such as Huawei and Xiaomi.

One of the most important pieces of information from the perspective of investors during this quareter's results will be the future of sales in China. Investors are expecting news that these levels are stabilizing. This scenario might be indicated by data released by the China Academy of Information and Communication Technology (CAICT) on increasing sales of foreign smartphones in the domestic market, which was up 10.9% year-on-year in June, and by almost 40% year-on-year in May. The data includes all foreign brands, but the increase is also likely to be reflected in Apple's performance, as the company is the main foreign player in China's smartphone market. 

The increase in sales in China was also related to strong discounts of Apple products in that market. Hence, while sales may grow in volume terms, this may not necessarily translate into an increase in revenue alone. The consensus forecast is for revenue from China to decline 3% y/y in 3Q23/24. Such dynamics would mean a consolidation of the trend of improving declines and in preparation for stabilization in this market, which is what investors are most hoping for. 

Apple's sales growth rate in China. Source: Bloomberg, XTB Research

The AI topic still on the table 

Investors continue to await new information on the use of AI in new device software from Apple. For now, according to information from the company, in the first version of iOS 18 (set for release in September), solutions based on artificial intelligence will not be present, and its implementation is expected to be introduced in an update in October. New information on the latest generation of iPhones, Macs, iPads and artificial intelligence could be positive catalysts for the company's stock price increases.

A look at the chart

Apple, after a slight correction, bounced yesterday from a support level around $216. This level is at the same time near the local peak of mid-June. The company, despite the correction, remains in an upward trend. After the previous results, the company recorded a jump of more than 8% at the opening. A similar range of movement after today's results would imply an approach to the $240 level, which would mean an ATH breakout. 

So far, the results of companies from the so-called "Magnificent Seven" indicate, on the one hand, the continued strength of technology companies. However, on the other hand, reactions to these results show that investors are demanding virtually perfect data from the companies. At current market prices, a positive surprise over analysts' estimates is mostly priced in, hence if Apple does not significantly beat expectations a return to a correction and a discount in after-hours trading is possible. 

Source: xStation

The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.

Share:
Back

Join over 1 600 000 XTB Group Clients from around the world.