Summary
Highlights
Apple's Q1 results (January to March) showed a 5% increase in revenue year-over-year, totaling $95 billion, but fell short of the $98 billion expected by analysts. Net profit decreased by 3% to $22 billion due to rising supply chain costs. iPhone sales increased by 2%, which was considered underwhelming by analysts. The services sector, including App Store, iCloud, and Apple Music, saw a 10% revenue increase.
Following the results, Apple's stock price dropped by 6%. For short-term investors, it's recommended to wait for the stock to stop falling before buying to avoid 'catching the falling knife'. Buying should align with an upward trend, not during a decline.
Potential risks include Donald Trump's criticism regarding Apple's manufacturing locations and potential tariffs. iPhone sales in China have decreased by 2.3% as consumers increasingly favor domestic brands. Apple is also facing antitrust scrutiny over its App Store practices, which could weaken its services sector growth.
Apple's price-to-earnings ratio (PER) is 26, which suggests the stock is relatively cheap compared to historical levels and other tech companies. This indicates a good price-to-earnings quality. Apple also increased its dividend by 4% and announced a $100 billion share repurchase program, which can boost the stock price. Moving production to India and Vietnam could help mitigate trade war risks.
Apple is focusing on artificial intelligence and augmented reality. For long-term investors, the current PER of 26 might present an attractive buying opportunity. Short-term investors should wait for a clear upward trend before entering the market. Remember to do your own analysis, a free fundamental and technical analysis is available for subscribers in the description.