Apple reported robust fiscal third-quarter results following Thursday’s market close, signaling a strong upcoming cycle for AI-enabled iPhone upgrades. Revenues for the quarter ending in June hit $85.78 billion, a 5% increase year-over-year and above the LSEG estimate of $84.53 billion. Earnings per share climbed 11% to $1.40, surpassing the $1.35 consensus estimate.
Despite initial after-hours volatility, Apple shares recovered, closing the regular session down 1.7% amid a tough market. Highlights included record Services revenue and a growing active device base. The company’s gross margin stood at 46.3%, with Services profitability offsetting a slight shortfall in product margins.
Revenue growth was seen across multiple countries, despite a 6.5% drop in Greater China, mitigated by exchange rate issues. CEO Tim Cook emphasized the promising future of generative AI, with significant investments planned. Though iPhone sales saw a minor decline, they increased on a constant currency basis, setting records in several countries. The MacBook Air with the M3 chip and new iPad models also drove strong sales.
Apple’s cash flow remains robust, with $153 billion in cash and $52 billion net cash after debt. The firm returned over $32 billion to shareholders through buybacks and dividends. Services revenue hit an all-time high, driven by increased paid subscriptions and customer engagement.
Looking ahead, Apple projects a stable fiscal Q4, with expected revenue growth of 5% year-over-year and double-digit growth in Services. Gross margins are forecasted between 45.5% and 46.5%, with controlled operating expenses. Investors are advised to hold Apple shares, anticipating further AI-driven gains and a reaffirmed $240-per-share price target.
Original Story https://www.cnbc.com/2024/08/01/apple-strong-quarter-puts-it-on-sure-footing-ahead-of-ai-iphone-launch.html
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