Apple (AAPL) Q2 Earnings Preview

The latest US earnings season has got off to a strong start, with key big tech names – including Alphabet, Microsoft, Meta, and Amazon – all delivering revenue and earnings beats as part of their most recent results. 

When will Apple report earnings?

All eyes will now likely be on tech giant Apple (AAPL), which is set to hand down its second quarter (Q2) earnings results on 5 May. 

Apple’s Q1 review

In the first quarter, Apple notched up a number of records, including all-time high Services revenue as well as announcing the milestone of reaching an install base of 2 billion active devices. 

Despite those records, Apple’s revenue went backwards in Q1, with total quarterly revenue declining 5% to US$117.8 billion. iPhone sales continued to be the key driver of sales for Apple in Q1, delivering revenue of US$65.7 billion, while Services revenue reached US$20.8 billion.

On the bottom line, net income was US$29.9 billion, which translated into Q1 earnings per share of US$1.88, below analyst estimates of US$1.94 earnings per share.  

How the Apple share price has performed in 2023

Despite missing earnings in the first quarter, besides Meta, Apple has been one of the best performing big cap technology stocks in 2023, with its stock up 34.6% year to date, trading at US$168.41 per share, as of 28 April – implying a market capitalisation of US$2.66 trillion.  

Apple is also currently the largest weight of the S&P 500 – accounting for a staggering 7.18% of the index as of 28 April.  

What analysts expect from Apple’s Q2 results

Analysts remain bullish on Apple’s prospects as we head into the second quarter results – with the stock carrying a Buy rating on average. 

We’ve also seen top investment banks raise their price target on Apple in April, including:

  • Deutsche Bank raising their price target from US$166 to US$170
  • JPMorgan upping their price target from US$175 to US$190 

More broadly, the median analyst price target of US$174.0 on Apple suggests potential upside of 3.30% from where the stock closed on 27 April, though it also suggests that analysts believe Apple is currently priced relatively fairly.  

Looking ahead, the consensus from analysts is for Apple to report the following as part of its Q2 earnings: 

  • Q2 EPS of US$1.43 
  • Q2 revenue of US$92.9 billion

Those consensus estimates would imply a year-on-year deceleration in growth – across the top and bottom lines, with Apple reporting EPS of US$1.52 and revenue of US$97.3 billion – in the second quarter of 2022. 

Despite those expected declines, analysts – such as those from JPMorgan recently argued that Apple represents a ‘relative safe haven’ amid the current macro uncertainty we are witnessing. 

Other investment banks, like Morgan Stanley, have described Apple as their ‘top pick for 2023’ and argued that investors are currently ‘underappreciating’ a number of bullish catalysts that might play out over the next 12-months.

More US earnings to watch 

Beyond Apple’s looming Q2 earnings, between 1 to 5 May – these are the earnings results on our watch list:  

  • Uber (UBER) | Q1 earnings | 2 May | EPS expectations: – US$0.09, revenue expectations: US$8.7 billion 
  •  Starbucks (SBUX) | Q2 earnings | 3 May | EPS expectations: US$0.65, revenue expectations: US$8.4 billion 
  • Advanced Micro Devices (AMD) | Q1 earnings | 3 May | EPS expectations: US$0.56, revenue expectations: US$5.3 billion 
  • Kraft Heinz (KHC) | Q1 earnings | 3 May | EPS expectations: US$0.60, revenue expectations: US$6.4 billion 
  • Shopify (SHOP) | Q1 earnings | 5 May | EPS expectations: – US$0.04, revenue expectations: US$1.4 billion

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